-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TA0fs/F23uFC2WBZ8TrVG0H2TlB5OktS5cthAKNo0OOFsbNy81HcVIVpwGt6OphT lOWCTyAY0/6KforP+B1aKw== 0000931763-97-000827.txt : 19970515 0000931763-97-000827.hdr.sgml : 19970515 ACCESSION NUMBER: 0000931763-97-000827 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AARON RENTS INC CENTRAL INDEX KEY: 0000706688 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 580687630 STATE OF INCORPORATION: GA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12385 FILM NUMBER: 97605111 BUSINESS ADDRESS: STREET 1: 3001 N FULTON DR NE STREET 2: 1100 AARON BLDG CITY: ATLANTA STATE: GA ZIP: 30363 BUSINESS PHONE: 4042310011 MAIL ADDRESS: STREET 1: 309 E. PACES FERRY ROAD., N.E. STREET 2: 3001 N FULTON DRIVE NE CITY: ATLANTA STATE: GA ZIP: 30305-2377 10-Q 1 FOR QUARTER ENDED MARCH 31, 1997 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Quarterly Report under Section 13 or 15 (d) of the Securities Exchange Act of l934 March 31,1997 0-12385 ------------- ------- For Quarter Ended Commission File No. AARON RENTS, INC. --------------------- (Exact name of registrant as specified in its charter) GEORGIA 58-0687630 ------- ---------- (State or other jurisdiction of (I. R. S. Employer incorporation or organization) Identification No.) 309 E. PACES FERRY ROAD, N.E. ATLANTA, GEORGIA 30305-2377 ---------------- ---------- (Address of principal (Zip Code) executive offices) (404) 231-0011 -------------- (Registrant's telephone number, including area code) NOT APPLICABLE (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT) Indicate by check mark whether registrant (l) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of l934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X ---- No ____ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Shares Outstanding as of Title of Each Class May 9, 1997 ------------------- ----------- Common Stock, $.50 Par Value 15,089,446 Class A Common Stock, $.50 Par Value 3,869,506
PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS AARON RENTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(unaudited) March 31, December 31, 1997 1996 ------------ -------------- (in thousands) ASSETS: Cash $ 91 $ 84 Accounts Receivable 11,004 10,491 Rental Merchandise 212,195 210,516 Less: Accumulated Depreciation (62,482) (60,532) ------------ -------------- 149,713 149,984 Property, Plant and Equipment, Net 31,412 33,267 Prepaid Expenses and Other Assets 3,120 4,277 ------------ -------------- Total Assets $ 195,340 $ 198,103 ============ ============== LIABILITIES AND SHAREHOLDERS' EQUITY: Accounts Payable and Accrued Expenses $ 24,923 $ 24,999 Dividends Payable 382 Deferred Income Taxes Payable 4,464 2,882 Customer Deposits and Advance Payments 7,276 7,140 Bank Debt 48,337 55,125 Other Debt 240 ------------ -------------- Total Liabilities 85,000 90,768 Shareholders' Equity: Common Stock, Par Value $.50 Per Share; Authorized: 25,000,000 Shares; Shares Issued: 16,170,987 8,085 8,085 Common Stock, Class A, Par Value $.50 Per Share; Authorized: 25,000,000 Shares; Shares Issued: 5,361,761 2,681 2,681 Additional Paid in Capital 15,445 15,445 Retained Earnings 100,538 96,226 ------------ -------------- 126,749 122,437 Less: Treasury Shares at Cost, Common Stock, 499,741 Shares at March 31, 1997 and 415,941 Shares at December 31, 1996 (3,226) (2,315) Class A Common Stock, 1,455,255 Shares at March 31, 1997 and 1,418,855 Shares at December 31, 1996 (13,183) (12,787) ------------ -------------- Total Shareholders' Equity 110,340 107,335 ------------ -------------- Total Liabilities and Shareholders' Equity $ 195,340 $ 198,103 ============ ==============
See Notes to Consolidated Financial Statements AARON RENTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
Three Months Ended ----------------------------- March 31, ----------------------------- 1997 1996 ----------------------------- (in thousands, except per share amounts) REVENUES: Rentals and Fees $ 57,016 $ 49,481 Retail Sales 15,067 12,914 Non-Retail Sales 2,971 1,593 Other 1,426 705 -------------- ------------ 76,480 64,693 -------------- ------------ COSTS AND EXPENSES: Retail Cost of Sales 11,083 9,034 Non-Retail Cost of Sales 2,783 1,489 Operating Expenses 37,051 32,070 Depreciation of Rental Merchandise 17,614 14,592 Interest 869 717 -------------- ------------ 69,400 57,902 -------------- ------------ EARNINGS BEFORE TAXES 7,080 6,791 INCOME TAXES 2,768 2,632 -------------- ------------ NET EARNINGS $ 4,312 $ 4,159 ============== ============ EARNINGS PER SHARE $ .22 $ .21 -------------- ------------ CASH DIVIDENDS DECLARED PER SHARE Common Stock $ - $ - -------------- ------------ Class A Common Stock $ - $ - -------------- ------------ WEIGHTED AVERAGE SHARES OUTSTANDING 19,985 19,844 ============== ============
See Notes to Consolidated Financial Statements AARON RENTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended ------------------ March 31, --------- 1997 1996 ---------- --------- (in thousands) OPERATING ACTIVITIES Net Earnings $ 4,312 $ 4,159 Depreciation and Amortization 16,566 16,272 Deferred Taxes 2,646 518 Change in Accounts Payable and Accrued Expenses (76) (267) Change in Accounts Receivable (513) 826 Other Changes, Net 253 2,105 -------- -------- Cash Provided by Operating Activities 23,188 23,613 -------- -------- INVESTING ACTIVITIES Additions to Property, Plant and Equipment (2,412) (3,230) Book Value of Property Retired or Sold 2,672 251 Additions to Rental Equipment (32,095) (31,242) Book Value of Rental Equipment Sold 17,456 11,300 Contracts and Other Assets Acquired (85) -------- -------- Cash Used by Investing Activities (14,464) (22,921) -------- -------- FINANCING ACTIVITIES Proceeds from Revolving Credit Agreement 17,970 16,448 Repayments on Revolving Credit Agreement (24,758) (15,742) (Decrease) Increase of Other Debt (240) 1,081 Dividends Paid (382) (365) Acquisition of Treasury Stock (1,405) (2,220) Issuance of Stock Under Stock Option Plan 98 105 -------- -------- Cash Used by Financing Activities (8,717) (693) -------- -------- Increase (Decrease) in Cash 7 (1) Cash at Beginning of Year 84 98 -------- -------- Cash at Beginning of Period $ 91 $ 97 ======== ========
See Notes to Consolidated Financial Statements AARON RENTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) PRINCIPLES OF CONSOLIDATION: ---------------------------- The consolidated financial statements include the accounts of Aaron Rents, Inc. ("the Company") and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. INTERIM FINANCIAL STATEMENTS: ----------------------------- The Consolidated Balance Sheet as of March 31, 1997, and the Consolidated Statements of Earnings and Cash Flows for the three months ended March 31, 1997 and 1996, have been prepared without audit. In the opinion of management, all adjustments necessary to present fairly the financial position, results of operations and cash flows at March 31, 1997 and for all periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the Year Ended December 31, 1996. The results of operations for the period ended March 31, 1997 are not necessarily indicative of the operating results for the full year. PART I - FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS: - --------------------- THE QUARTER ENDED MARCH 31, 1997, COMPARED TO THE QUARTER ENDED MARCH 31, 1996: Total revenues for the first quarter of 1997 increased $11.8 million (18.2%) to $76.5 million compared to $64.7 million for the same period a year ago. This increase in revenues was primarily due to a $7.5 million (15.2%) increase in rentals and fees revenues and $2.2 million (16.7%) increase in retail sales. Of this increase in rental revenues, $5.0 million was attributable to Aaron's Rental Purchase stores, which increased 21.3% to $28.6 million compared to $23.6 million last year. Rental revenues from the Company's rent-to-rent operations increased $2.5 million (9.7%) to $28.4 million compared to $25.9 million during the same period a year ago. The $2.2 million increase in retail sales was due to an increase in the continued sale of rental return merchandise and the sale of new office furniture in the rent-to-rent division. Non-retail sales, which represent wholesale sales to primarily Aaron's Rental Purchase franchisees, increased $1.4 million (86.5%) to $3.0 million compared to $1.6 million for the same period last year. The increased sales are due to the growth of the franchise operations. Other revenue increased $721,000 (102.3%) to $1.4 million compared to $705,000 last year. Included in other revenues is an increase of $513,000 in franchise and royalty fee income due to a net increase of 33 franchised stores as well as older franchised stores gaining in revenues. Franchise and royalty fee income for the current quarter was $905,000 compared with $392,000 for the same period last year. Retail cost of sales increased $2 million (22.7%) to $11 million compared to $9 million last year, and as a percentage of retail sales, increased to 73.6% from 70.0% primarily due to the liquidation of rental return merchandise and product mix. Non-retail cost of sales increased $1.3 million (86.9%) to $2.8 million from $1.5 million last year, and as a percentage of sales, increased to 93.7% from 93.5%. The increase in cost of sales as a percentage of sales is due to a larger percentage of franchise sales in 1997 which are at lower margins than other miscellaneous non-retail sales. Operating expenses increased $5.0 million (15.5%) to $37.1 million from $32.1 million last year. As a percentage of total revenues, operating expenses decreased to 48.4% from 49.6% for the same period a year ago. Depreciation of rental merchandise increased $3.0 million (20.7%) to $17.6 million compared to $14.6 million last year, and as a percentage of total rentals and fees, increased to 30.9% versus 29.5% for the same period in 1996. The increase is primarily due to increased depreciation in the rental purchase division. Interest expense increased $152,000 (21.2%) to $869,000 compared to $717,000 last year. As a percentage of total revenue, interest was 1.1% for both periods due primarily to the stability of interest rates during the quarter. Income tax expense increased $136,000 (5.2%) to $2.8 million compared to $2.6 million last year, and the Company's effective tax rate was 39.1% for the quarter versus 38.8% for the same period in 1996 due to higher state income taxes. As a result, net earnings increased $153,000 (3.7%) to $4.3 million in the first quarter of 1997 compared to $4.2 million for the same period in 1996. As a percentage of total revenues, net earnings decreased to 5.6% in the current quarter as compared to 6.4% for the same period last year. The weighted average number of shares outstanding during the first quarter of 1997 was 19,985,000 compared to 19,844,000 for the same period last year. Prior year weighted average shares outstanding have been restated to reflect the June, 1996 100% stock dividend. LIQUIDITY AND CAPITAL RESOURCES: - -------------------------------- During the first quarter of 1997, the Company paid a semi-annual dividend that was declared in December 1996 of $.02 per share on both Common Stock and Class A Common Stock respectively. On May 6, 1997, the Company declared a Semi-annual dividend payable on July 8, 1997 of $.02 per share on both Common Stock and Class A Common Stock. In February of 1997 the Company's Board of Directors authorized the repurchase of 1,000,000 common shares. Management believes its expected cash flow from operations, proceeds from the sale of rental return merchandise, bank borrowings, and vendor credit are adequate to supply short-term capital needs, and that it has the ability to obtain additional long-term capital if needed. PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS The following is a description of the matters submitted to a vote at the May 6, 1997 Annual Shareholders meeting and the results of that vote. (1) The election of ten directors to constitute the Board of Directors until the next annual meeting and until their successors are elected and qualified: For: 3,595,836 Withheld: 17,888 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K: (a) The following exhibits are furnished herewith: Exhibit Number Description of Exhibit Page No. ------ ---------------------- -------- 11 Computation of Earnings Per Share 10 27 Financial Data Schedule 11 (b) No reports on Form 8-K were filed by the Registrant during the three months ended March 31, 1997. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of l934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AARON RENTS, INC. (Registrant) Date - May 13, 1997 ---------------- /s/ Gilbert L. Danielson ------------------------------ Gilbert L. Danielson Vice President, Finance Chief Financial Officer Date - May 13, 1997 ---------------- /s/ Robert P. Sinclair, Jr. ------------------------------ Robert P. Sinclair, Jr. Corporate Controller EX-11 2 COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11 ---------- COMPUTATION OF EARNINGS PER SHARE
Three Months Ended ------------------------ March 31, ------------------------ 1997 1996 ------------------------ (in thousands, except per share data) Primary: Net Income $ 4,312 $ 4,159 ========= ======== Weighted average number of common shares outstanding 19,654 19,194 Add: Dilutive effect of outstanding options, as determined by the application of the treasury stock method using the average market price of the Company's common stock 331 650 ---------- -------- Weighted average number of common and common equivalent shares 19,985 19,844 ---------- -------- Primary earnings per share $ .22 $ .21 ========== ======== Fully diluted: Weighted average number of common and common equivalent shares 19,985 19,844 Add: Additional dilutive effect of outstanding options, as determined by the application of the treasury stock method using the quarter end market price of the Company's common stock 5 44 ------ -------- Weighted average number of common shares fully diluted 19,990 19,888 ------ -------- Fully diluted earnings per share * $ 0.22 $ 0.21 ====== ========
*Not presented in Financial Statements since dilutive effect is less than 3%. **Prior year earnings per share and weighted average shares have been restated to reflect the June, 1996 2 for 1 stock dividend. EX-27 3 ARTICLE 5 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 91 0 11,004 0 149,713 0 31,412 0 195,340 0 0 0 0 10,766 99,574 195,340 18,038 76,480 13,866 68,531 0 0 869 7,080 2,768 4,312 0 0 0 4,312 .22 .22 The allowance of doubtful accounts is netted against total accounts receivable in the Accounts Receivable balance. Rental merchandise has been classified as inventory for purposes of this schedule. Rental merchandise has been shown net of 62,482 accumulated depreciation. The financial statements are presented with an unclassified balance sheet. PP&E has been shown net of accumulated depreciation.
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