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Aaron Rents, Inc. Reports Results for Third Quarter and Nine Months

10/29/2001

For the three months ended September 30, revenues increased 6% to $132.5 million compared to $124.9 million for the third quarter of 2000. Before one-time charges, net earnings for the third quarter this year were $1.5 million versus $6.7 million last year and diluted earnings per share were $.08 compared to $.34 per share for the third quarter a year ago. During the quarter the Company recorded $5.6 million of one-time, non-cash charges pertaining to its rent-to-rent division.

For the nine months of this year, revenues advanced 9% to $406.7 million compared to $372.1 million for the first nine months of 2000. Net earnings for the nine months, before the one-time charges, were $13.8 million versus $20.9 million for the corresponding period last year. Diluted earnings per share for the first nine months of this year, before the one-time charges, were $.69 compared to $1.05 per share for the same period last year.

The Aaron's Sales and Lease Ownership division increased its third quarter revenues 20% to $96.0 million versus $79.8 million for the third quarter last year. Systemwide revenues for this division, which include revenues of franchised stores, also rose 20% to $141.9 million versus $118.7 million for the third quarter a year ago. First nine months sales and lease ownership revenues increased 22% to $287.6 million compared to $236.7 million last year, and systemwide revenues for this division also advanced 22% to $427.2 million compared to $348.8 million for the first nine months of last year.

Revenues from Company-operated sales and lease ownership stores open in comparable quarters increased 6.9% during the third quarter compared to the same period a year ago. During the quarter the Company opened 54 Company- operated Aaron's Sales and Lease Ownership stores, three franchised stores and acquired five franchised stores. The Company plans to open another 15 Company-operated and 10 franchised stores during the fourth quarter of this year. The start-up expenses associated with the rapid openings of these new stores negatively affected earnings in the third quarter by approximately $.15 per diluted share.

"We are very pleased with the continuing strong demand for Aaron's Sales and Lease Ownership products and services," said R. Charles Loudermilk, Sr., Chairman and Chief Executive Officer. "During the first nine months of this year, we have added a total of 100 additional sales and lease ownership stores and expect to add 25 more stores in the fourth quarter, giving us a total of over 580 stores systemwide in this division by year end -- an increase of more than 27% in store count for the year. This rapid increase in store count has been possible this year due to our previously announced acquisition of over 80 former Heilig-Meyers locations, which has created a tremendous opportunity for us to accelerate our growth rate over the next several years."

During the third quarter the Company recorded $5.6 million of one-time, non-cash charges relating to its rent-to-rent division. These charges consist of $3.8 million for the recording of future real estate lease obligations of closed rent-to-rent stores, $1.0 million pertaining to the write-down of inventory, and $800,000 primarily for the write-down of other assets relating to the division.

"Even though the rent-to-rent division has lost revenue this year, it has generated over $20 million of cash flow during the first nine months of the year, and this has allowed us to re-deploy our resources to the adding of Aaron's Sales and Lease Ownership stores. Our balance sheet remains strong, with bank debt of $71 million at the end of September, down $30 million from the levels of December, 2000," continued Mr. Loudermilk.

"The slowing economy and the events of September 11 have drastically affected our rent-to-rent business in 2001. However, as of this date it doesn't appear these events have had an adverse impact on our Aaron's Sales and Lease Ownership division," Mr. Loudermilk added.

"We expect diluted earnings per share in the range of $.10 to $.15 per share in the fourth quarter of this year, which would include $.10 to $.15 per share of startup expenses relating to the ramp up of new stores," continued Mr. Loudermilk. "We plan at this time to limit new Company-operated store openings in the Aaron's Sales and Lease Ownership division in 2002, and expect both 2002 and 2003 to be strong years as our new stores mature in revenues and earnings. Our preliminary guidance for 2002 is the Company achieving revenues in excess of $600 million, systemwide revenues being over $800 million, and earnings per share in the range of $1.30 to $1.40. Prior to the end of December we expect to give additional guidance on the outlook for 2002."

At September 30 the Company had 556 Aaron's Sales and Lease Ownership stores open systemwide, including 357 Company-operated and 199 franchised stores, along with 78 rent-to-rent stores, for a total of 634 stores in 43 states and Puerto Rico.

Aaron Rents, Inc. based in Atlanta, currently has more than 640 Company- operated and franchised stores in 43 states and Puerto Rico for the rental and sale of residential and office furniture, accessories, consumer electronics and household appliances. The Company also manufactures furniture, bedding and accessories at 11 facilities in four states.

Note: Forward-looking statements in this news release are based on current expectations and are subject to risks and uncertainties, and actual results may vary materially from the expectations due to such factors as changes in general economic conditions, competition, pricing, customer demand and other issues.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this news release regarding Aaron Rents, Inc.'s business which are not historical facts are "forward-looking statements" that involve risks and uncertainties and which could cause actual results to differ from those contained in the forward-looking statements. For a discussion of such risks and uncertainties see "Risk Factors" in the Company's Annual Report on Form 10-K for fiscal 2000, which discussion is incorporated herein by this reference.

                      Aaron Rents, Inc. and Subsidiaries
                     Consolidated Statements of Earnings
                   (In thousands, except per share amounts)

                                     (Unaudited)            (Unaudited)
                                  Three Months Ended      Nine Months Ended
                                     September 30,          September 30,
                                   2001      2000        2001         2000
    Revenues:
       Rentals and Fees          $99,361   $89,460     $301,966     $266,231
       Retail Sales               14,931    16,466       46,961       48,301
       Non-Retail Sales           14,640    15,237       46,080       46,459
       Other                       3,584     3,687       11,689       11,141
          Total                  132,516   124,850      406,696      372,132

     Costs and Expenses:
       R Before
     Taxes                        (3,158)   10,799       16,642       33,717

    Income Taxes (Benefit)        (1,197)    4,093        6,307       12,804

    Net Earnings (Loss)          ($1,961)   $6,706      $10,335      $20,913

    Earnings (Loss) Per Share     ($0.10)    $0.34        $0.52        $1.05

    Earnings (Loss) Per Share
      Assuming Dilution           ($0.10)    $0.34        $0.51        $1.05

    Weighted Average
      Shares Outstanding          19,959    19,834       19,914       19,841

    Weighted Average
      Shares Outstanding
      Assuming Dilution           19,959    19,938       20,140       19,980

    (1)  Includes $5.6 million in special charges in the third quarter of 2001
         relating to the Company's rent-to-rent division.

                    

CONTACT:          Gilbert L. Danielson, Executive Vice President and Chief
                  Financial Officer of Aaron Rents, Inc., 404-231-0011


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