Aaron Rents, Inc. Reports Results for Second Quarter; Same Store Revenues up 9.9%; Earnings up 35%

Jul 24, 2002

The Company's major division, Aaron's Sales & Lease Ownership, continued its high-growth performance by increasing revenues 28% for the second quarter and 27% for the first half of the year. The division's same store revenue growth for the second quarter was 9.9%.

"We are very pleased with these results, which are driven by the continuing expansion in the Aaron's Sales & Lease Ownership division," said R. Charles Loudermilk, Sr., Chairman and Chief Executive Officer of Aaron Rents, Inc. "We feel we are in an excellent position to continue to show improving performance in upcoming quarters."

For the three months ended June 30, revenues increased 14% to a record $151.2 million compared to $132.8 million for the second quarter of 2001. Net earnings for the second quarter this year increased 35% to $6.7 million versus $5.0 million last year. Diluted earnings per share for the quarter were $.32 compared to $.25 per share for the second quarter a year ago.

For the first six months of this year, revenues advanced 12% to a record $307.8 million compared to $274.2 million for the first half of 2001. Net earnings for the six months were $12.6 million versus $12.3 million for the corresponding period last year. Diluted earnings per share for the first half were $.62 for 2002 and $.61 for 2001.

Systemwide revenues for the Company, which includes revenues of franchised stores, advanced 17% to $208.0 million for the quarter and 15% to $423.3 million for the six months.

The Aaron's Sales & Lease Ownership division increased its second quarter revenues 28% to $120.1 million versus $93.7 million for the second quarter last year. Systemwide revenues for this division, including franchised stores, rose 27% to $177.0 million versus $139.4 million compared to the second quarter a year ago. First half sales and lease ownership revenues increased 27% to $243.4 million compared to $191.5 million last year, and systemwide revenues advanced 26% to $358.9 million compared to $285.3 million for the first half of last year.

Net earnings were adversely impacted during the second quarter and first six months of 2002 by approximately $.05 and $.14 diluted earnings per share, respectively, resulting from the start-up expenses associated with the rapid opening of Aaron's Sales & Lease Ownership stores during 2001. In addition, the Company's earnings were positively affected during the quarter and first six months by two accounting changes. First, diluted earnings per share increased approximately $.04 and $.07 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. Second, diluted earnings per share increased $.01 and $.02 in the quarter and first six months, respectively, as a result of the goodwill non-amortization provisions of a new accounting standard.

The Aaron's Sales & Lease Ownership division increased its store count during the second quarter by seven stores, one Company-operated store and six franchised stores, bringing the total of stores open at June 30 to 586. At the end of June the Company also had 73 rent-to-rent stores open.

During June 2002 the Company sold 1,725,000 of Common Stock in a secondary stock offering, using the proceeds of $34.3 million to pay down its bank debt, which was reduced to $26.3 million at the end of June.

"We are revising our guidance for 2002, and now expect revenues during the year in excess of $615 million with systemwide revenues exceeding $840 million," Mr. Loudermilk continued. "For the third quarter of 2002 we expect diluted earnings per share to be in the range of $.30 to $.32 per share with earnings per share for the full 2002 year in a range of $1.27 to $1.32 per diluted share. Our initial outlook for 2003 is achieving diluted earnings per share in the range of $1.55 to $1.65. We are very positive on the future prospects for the Company."

Aaron Rents, Inc. based in Atlanta, currently has more than 650 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     Six Months Ended
                         June 30,          June 30,
                     2002         2001    2002       2001



        Revenues:
        Rentals and     $113,643    $100,537 $226,145  $202,605
            Fees
        Retail Sales      14,150      14,754   31,165    32,030
        Non-Retail
            Sales         18,801      13,494   41,264    31,440
        Other              4,568       3,978    9,251     8,105
             Total       151,162     132,763  307,825   274,180

        Costs and Expenses
        Retail Cost of
            Sales         10,388      10,985   22,766    23,207
        Non-Retail Cost
            of Sales      17,348      12,773   38,176    29,502
        Operating
            Expenses      71,654      65,718  144,788   132,272
        Depreciation of
            Rental
            Merchandise   40,036      33,585   79,736    66,067
        Interest           1,070       1,704    2,236     3,332
            Total        140,496     124,765  287,702   254,380

        Earnings Before
            Taxes         10,666       7,998   20,123    19,800

        Income Taxes       3,970       3,031    7,506     7,504

        Net Earnings      $6,696      $4,967  $12,617   $12,296

        Earnings Per
            Share           $.33        $.25     $.63      $.62

        Earnings Per Share
          Assuming
          Dilution          $.32        $.25     $.62      $.61

        Weighted Average
          Shares
          Outstanding     20,353      19,911   20,134    19,891

        Weighted Average
          Shares Outstanding
          Assuming
          Dilution        20,761      20,141   20,489    20,110

                    

CONTACT:          Gilbert L. Danielson, Executive Vice President and Chief
                  Financial Officer of Aaron Rents, Inc., +1-404-231-0011