Aarons 2014 Annual Report Download - page 43

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33
Results of Operations
As of December 31, 2014, the Company had five operating and reportable segments: Sales and Lease Ownership, Progressive,
HomeSmart, Franchise and Manufacturing. The results of Progressive, which is presented as a reportable segment, have been
included in the Company's consolidated results from the April 14, 2014 acquisition date. In January 2014, the Company sold
the 27 Company-operated RIMCO stores and the rights to five franchised RIMCO stores. In all periods presented, RIMCO has
been reclassified from the RIMCO segment to Other.
The Company’s Sales and Lease Ownership, Progressive, HomeSmart, and Franchise segments accounted for substantially all
of the operations of the Company and, therefore, unless otherwise noted, only material changes within these four segments are
discussed. The production of our Manufacturing segment, consisting of the Woodhaven Furniture Industries division, is
primarily leased or sold through the Company-operated and franchised stores, and consequently, substantially all of that
segment’s revenues and earnings before income taxes are eliminated through the elimination of intersegment revenues and
intersegment profit.
Results of Operations – Years Ended December 31, 2014, 2013 and 2012
Change
Year Ended December 31, 2014 vs. 2013 2013 vs. 2012
(In Thousands) 2014 2013 2012 $ % $ %
REVENUES:
Lease Revenues
and Fees $2,251,780 $1,748,699 $1,676,391 $ 503,081 28.8 % $ 72,308 4.3 %
Retail Sales 38,360 40,876 38,455 (2,516) (6.2) 2,421 6.3
Non-Retail Sales 363,355 371,292 425,915 (7,937) (2.1) (54,623) (12.8)
Franchise Royalties and
Fees 65,902 68,575 66,655 (2,673) (3.9) 1,920 2.9
Other 5,842 5,189 5,411 653 12.6 (222) (4.1)
2,725,239 2,234,631 2,212,827 490,608 22.0 21,804 1.0
COSTS AND EXPENSES:
Depreciation of Lease
Merchandise 932,634 628,089 601,552 304,545 48.5 26,537 4.4
Retail Cost of Sales 24,541 24,318 21,608 223 .9 2,710 12.5
Non-Retail Cost of Sales 330,057 337,581 387,362 (7,524) (2.2) (49,781) (12.9)
Operating Expenses 1,262,007 1,022,684 952,617 239,323 23.4 70,067 7.4
Financial Advisory and
Legal Costs 13,661 — — 13,661 nmf — —
Restructuring Expenses 9,140 — — 9,140 nmf — —
Retirement and Vacation
Charges 9,094 4,917 10,394 4,177 85.0 (5,477) (52.7)
Progressive-Related
Transaction Costs 6,638 — — 6,638 nmf — —
Legal and Regulatory
(Income) Expenses (1,200) 28,400 (35,500)(29,600) nmf 63,900 nmf
Other Operating (Income)
Expense, Net (1,176) 1,584 (2,235)(2,760) (174.2) 3,819 170.9
2,585,396 2,047,573 1,935,798 537,823 26.3 111,775 5.8
OPERATING PROFIT 139,843 187,058 277,029 (47,215) (25.2) (89,971) (32.5)
Interest Income 2,921 2,998 3,541 (77) (2.6) (543) (15.3)
Interest Expense (19,215) (5,613) (6,392) 13,602 242.3 (779) (12.2)
Other Non-Operating
(Expense) Income, Net (1,845) 517 2,677 (2,362) (456.9) (2,160) (80.7)
EARNINGS BEFORE
INCOME TAXES 121,704 184,960 276,855 (63,256) (34.2) (91,895) (33.2)
INCOME TAXES 43,471 64,294 103,812 (20,823) (32.4) (39,518) (38.1)
NET EARNINGS $ 78,233 $ 120,666 $ 173,043 $ (42,433) (35.2)% $ (52,377) (30.3)%
nmf—Calculation is not meaningful