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