For the three months ended September 30, revenues increased 19% to a record
$157.8 million compared to $132.5 million for the third quarter of last year.
Net earnings increased to $6.7 million versus $1.5 million before one-time
charges in 2001. Diluted earnings per share were $.31 compared to $.08 per share
before the one-time charges last year. The Company's major division, Aaron's
Sales & Lease Ownership, increased revenues 34% to $128.3 million. The
division's same store revenue growth for the quarter, which represents revenues
from stores open during the entirety of both quarters, was 13.6%.
For the first nine months of this year, revenues advanced 14% to a record $465.7
million compared to $406.7 million for the same period of 2001. Net earnings for
the nine months were $19.3 million versus $13.8 million, before the one-time
charges. Diluted earnings per share for the first nine months was $.92 for 2002
compared to $.69, before the one-time charges in 2001. Systemwide revenues for
the Company, which includes gross revenues of franchised stores, advanced 17% to
$639.8 million for the nine months.
In the third quarter of 2001, the Company recorded $5.6 million of one- time,
non-cash pre-tax charges pertaining to its rent-to-rent and manufacturing
divisions.
"These results reflect the continuing strong growth of our Aaron's Sales & Lease
Ownership division," said R. Charles Loudermilk, Sr., Chairman and Chief
Executive Officer of Aaron Rents, Inc. "We feel this growth will continue as our
stores grow in both volume and profitability."
Systemwide revenues for the Aaron's Sales & Lease Ownership division rose 32% to
$186.9 million versus $141.9 million compared to the third quarter a year ago.
For the nine month period sales and lease ownership revenues increased 29% to
$371.7 million compared to $287.6 million last year, and systemwide revenues
advanced 28% to $545.8 million compared to $427.2 million for the first nine
months of 2001.
Net earnings were adversely impacted during the third quarter and first nine
months of 2002 by approximately $.04 and $.18 diluted earnings per share,
respectively, resulting from the start-up expenses associated with the rapid
opening of Aaron's Sales & Lease Ownership stores. Diluted earnings per share
increased approximately $.04 and $.11 in the quarter and year to date period,
respectively, due to a January 1, 2002 change in the method of depreciating
merchandise in the Aaron's Sales & Lease Ownership division. In addition,
diluted earnings per share increased $.01 and $.03 in the quarter and first nine
months, respectively, as a result of the goodwill non-amortization provisions of
a new accounting standard.
At the end of August, the Company acquired substantially all of the assets of
Sight'n Sound Appliance Centers, Inc., a specialty retailer of furniture,
appliances, and electronics with stores located in Oklahoma and Kansas. The cash
purchase price, subject to adjustments, will be approximately $8.5 million for
inventory and other assets plus the assumption of certain liabilities and real
estate obligations. This acquisition added $4 million of retail sales to the
Company's results during the third quarter and reduced earnings by approximately
$.01 per diluted share. The Company is operating these stores as a separate unit
under a new Sight & Sound name and has begun to introduce its sales and lease
ownership plan in several of these stores.
"The Sight & Sound acquisition is a test for us to see whether or not we can
acquire a traditional retailer and increase its business by providing customers
the sales and lease ownership financing transaction," Mr. Loudermilk added. "We
plan to have all the Sight & Sound stores offering the sales and lease ownership
option by the end of the current fourth quarter, which will improve the
profitability of these stores. Early indications are that customers are
positively responding to the availability of the lease option."
Also, in August the Company strengthened its balance sheet by issuing $50
million of senior unsecured notes in a private debt transaction. The Company
used the proceeds from these notes to pay off outstanding debt under its
revolving credit agreement.
The Aaron's Sales & Lease Ownership division increased its store count during
the third quarter by 38 stores, five Company-operated stores, eight franchised
stores, and 25 Sight & Sound stores, bringing the total of stores open at
September 30 to 624. At the end of September the Company also had 70
rent-to-rent stores open.
"We are revising our guidance for 2002, and now expect revenues during the year
in excess of $635 million with systemwide revenues exceeding $860 million," Mr.
Loudermilk continued. "For the fourth quarter of 2002 we expect diluted earnings
per share to be in the range of $.35 to $.37 per share with earnings per share
for the full 2002 year in a range of $1.27 to $1.30 per diluted share. Our
outlook for 2003 is achieving diluted earnings per share in the range of $1.55
to $1.65."
Aaron Rents, Inc., based in Atlanta, currently has more than 690 Company-
operated and franchised stores across the United 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 10 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 Registration
Statement on Form S-3, file number 333-88392, filed with the Securities and
Exchange Commission on May 16, 2002, 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,
2002 2001 2002 2001
Revenues:
Rentals and Fees $115,369 $99,361 $341,514 $301,966
Retail Sales 17,623 14,931 48,788 46,961
Non-Retail Sales 19,805 14,640 61,069 46,080
Other 5,041 3,584 14,292 11,689
Total 157,838 132,516 465,663 406,696
Costs and Expenses:
Retail Cost of Sales 13,079 10,860 35,845 34,067
Non-Retail Cost of Sales 18,376 13,767 56,553 43,269
Operating Expenses (1) 73,184 75,061 217,972 207,333
Depreciation of Rental
Merchandise 41,394 34,271 121,130 100,338
Interest 1,136 1,715 3,372 5,047
Total 147,169 135,674 434,872 390,054
Earnings (Loss) Before Taxes 10,669 (3,158) 30,791 16,642
Income Taxes (Benefit) 3,948 (1,197) 11,453 6,307
Net Earnings (Loss) $6,721 ($1,961) $19,338 $10,355
Earnings (Loss) Per Share $.31 ($.10) $.94 $.52
Earnings (Loss) Per Share
Assuming Dilution $.31 ($.10) $.92 $.51
Weighted Average
Shares Outstanding 21,656 19,959 20,647 19,914
Weighted Average
Shares Outstanding
Assuming Dilution 21,980 19,959 20,965 20,140
(1) Includes $5.6 million in special charges in the third quarter of 2001
relating to the Company's rent-to-rent and manufacturing divisions.
CONTACT: Gilbert L. Danielson, Executive Vice President and Chief
Financial Officer of Aaron Rents, +1-404-231-0011
URL: http://www.aaronrents.com
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