10-Q 1 g71136e10-q.txt AARON RENTS, INC. 1 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 JUNE 30, 2001 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 executive offices) (Zip Code) (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 August 13, 2001 ------------------- --------------- Common Stock, $.50 Par Value 16,116,861 Class A Common Stock, $.50 Par Value 3,829,506 2 PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS AARON RENTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(Unaudited) June 30 December 31, 2001 2000 ----------------- --------------- (In thousands, except share data) ASSETS Cash $ 97 $ 95 Accounts Receivable 22,356 23,637 Rental Merchandise 386,590 381,930 Less: Accumulated Depreciation (123,863) (114,217) ---------------- --------------- 262,727 267,713 Property, Plant and Equipment, Net 70,575 63,174 Prepaid Expenses and Other Assets 34,126 25,760 ---------------- --------------- Total Assets $ 389,881 $ 380,379 ================ =============== LIABILITIES & SHAREHOLDERS' EQUITY Accounts Payable and Accrued Expenses $ 25,471 $ 34,693 Dividends Payable 399 399 Deferred Income Taxes Payable 28,814 20,986 Customer Deposits and Advance Payments 12,989 10,994 Bank Debt 94,046 100,000 Other Debt 7,638 4,769 ---------------- --------------- Total Liabilities 169,357 171,841 Commitments & Contingencies Shareholders' Equity Common Stock, Par Value $.50 Per Share; Authorized: 25,000,000 Shares; Shares Issued: 18,270,987 9,135 9,135 Class A Common Stock, Par Value $.50 Per Share; Authorized: 25,000,000 Shares; Shares Issued: 5,361,761 2,681 2,681 Additional Paid-in Capital 53,705 53,662 Retained Earnings 197,680 185,782 Accumulated Other Comprehensive Loss (918) ---------------- --------------- 262,283 251,260 Less: Treasury Shares at Cost, Common Stock, 2,154,126 Shares at June 30, 2001 and 2,230,446 Shares at December 31, 2000 (27,523) (28,486) Class A Common Stock, 1,532,255 Shares at June 30, 2001 and December 31, 2000 (14,236) (14,236) ---------------- --------------- Total Shareholders' Equity 220,524 208,538 ---------------- --------------- Total Liabilities & Shareholders' Equity $ 389,881 $ 380,379 ================ ===============
See Notes to Consolidated Financial Statements 3 AARON RENTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
Three Months Ended Six Months Ended -------------------------------- ------------------------------------ June 30, June 30, -------------------------------- ------------------------------------ 2001 2000 2001 2000 -------------------------------- ------------------------------------ (in thousands, except per share amounts) REVENUES: Rentals and Fees $ 100,537 $ 89,257 $ 202,605 $ 176,771 Retail Sales 14,754 14,530 32,030 31,835 Non-Retail Sales 13,494 14,392 31,440 31,222 Other 3,978 3,731 8,105 7,454 ------------ ----------- ---------------- ----------- 132,763 121,910 274,180 247,282 ------------ ----------- ---------------- ----------- COSTS AND EXPENSES: Retail Cost of Sales 10,985 10,191 23,207 22,424 Non-Retail Cost of Sales 12,773 13,412 29,502 28,905 Operating Expenses 65,718 55,594 132,272 112,009 Depreciation of Rental Merchandise 33,585 30,219 66,067 58,482 Interest 1,704 1,317 3,332 2,544 ------------ ----------- ---------------- ----------- 124,765 110,733 254,380 224,364 ------------ ----------- ---------------- ----------- EARNINGS BEFORE TAXES 7,998 11,177 19,800 22,918 INCOME TAXES 3,031 4,248 7,504 8,711 ------------ ----------- ---------------- ----------- NET EARNINGS $ 4,967 $ 6,929 $ 12,296 $ 14,207 ============ =========== ================ =========== EARNINGS PER SHARE $ .25 $ .35 $ .62 $ .72 ------------ ----------- ---------------- ----------- EARNINGS PER SHARE ASSUMING DILUTION .25 .35 .61 .71 ------------ ----------- ---------------- ----------- CASH DIVIDENDS DECLARED PER SHARE Common Stock $ .02 $ .02 $ .02 $ .02 ------------ ----------- ---------------- ----------- Class A Common Stock $ .02 $ .02 $ .02 $ .02 ------------ ----------- ---------------- ----------- WEIGHTED AVERAGE SHARES OUTSTANDING 19,911 19,790 19,891 19,845 ============ =========== ================ =========== WEIGHTED AVERAGE SHARES OUTSTANDING ASSUMING DILUTION 20,141 19,905 20,110 19,998 ============ ============ ================ ============
See Notes to Consolidated Financial Statements 4 AARON RENTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended ---------------- June 30, -------- 2001 2000 ---------- --------- (in thousands) OPERATING ACTIVITIES Net Earnings $ 12,296 $ 14,207 Depreciation and Amortization 73,478 64,258 Deferred Income Taxes 7,828 4,478 Change in Accounts Payable and Accrued Expenses (10,149) (9,159) Change in Accounts Receivable 1,281 (2,405) Other Changes, Net (3,994) 3,950 ---------- -------- Cash Provided by Operating Activities 80,740 75,329 ---------- --------- INVESTING ACTIVITIES Additions to Property, Plant and Equipment (16,511) (9,512) Book Value of Property Retired or Sold 2,705 4,709 Additions to Rental Equipment (118,678) (132,316) Book Value of Rental Equipment Sold 62,248 55,292 Contracts and Other Assets Acquired (8,025) (422) ---------- --------- Cash Used by Investing Activities (78,261) (82,249) ---------- --------- FINANCING ACTIVITIES Proceeds from Revolving Credit Agreement 133,115 97,765 Repayments on Revolving Credit Agreement (139,069) (89,161) Increase in Other Debt 2,869 1,694 Dividends Paid (398) (399) Acquisition of Treasury Stock (4,625) Issuance of Stock Under Stock Option Plans 1,006 1,638 ---------- --------- Cash (Used) Provided by Financing Activities (2,477) 6,912 ---------- --------- Increase (Decrease) in Cash 2 (8) Cash at Beginning of Year 95 99 ---------- --------- Cash at End of Period $ 97 $ 91 ========== =========
See Notes to Consolidated Financial Statements 5 AARON RENTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A: 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. The Consolidated Balance Sheet as of June 30, 2001, and the Consolidated Statements of Earnings and Cash Flows for the quarter and the six month period ended June 30, 2001 and 2000, 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 June 30, 2001 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, 2000. The results of operations for the period ended June 30, 2001 are not necessarily indicative of the operating results for the full year. Certain amounts in the 2000 segment information have been reclassified to conform to the 2001 presentation. In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 142, "Goodwill and Other Intangible Assets", effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests in accordance with the Statement. Other intangible assets will continue to be amortized over their useful lives. The Company will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of 2002. During 2002, the Company will apply the non-amortization provisions and perform the first of the required impairment tests of goodwill and indefinite lived intangible assets as of January 1, 2002. The Company has not yet determined what effect the statement will have on the earnings and financial position of the Company. NOTE B: ACCUMULATED OTHER COMPREHENSIVE LOSS AND COMPREHENSIVE INCOME The following is a summary of the accumulated other comprehensive loss for the six month period ended June 30, 2001: December 31, 2000 - Cumulative effect of the adoption of FAS 133, Net of income taxes $(497) Unrealized loss on the fair market value of Interest rate swap agreements, net of income taxes (421) ----- $(918) ===== Comprehensive income for the six month period ended June 30, 2001 totaled $11,378,000. There were no differences between comprehensive income and net income in the six month period ended June 30, 2000. 6 NOTE C: SEGMENT INFORMATION
Three Months Ended Six Months Ended ---------------------- ---------------------- 2001 2000 2001 2000 --------- --------- --------- --------- (in thousands) REVENUES FROM EXTERNAL CUSTOMERS: Sales & Lease Ownership $ 88,714 $ 72,203 $ 184,265 $ 149,429 Rent-to-Rent 38,789 44,163 82,080 89,735 Franchise 3,532 3,048 6,980 5,978 Other 808 1,782 1,881 2,606 Manufacturing 9,376 13,022 22,001 30,470 Elimination of intersegment revenues (9,477) (13,042) (22,225) (30,535) Cash to accrual adjustments 1,021 734 (802) (401) --------- --------- --------- --------- Total revenues from external customers $ 132,763 $ 121,910 $ 274,180 $ 247,282 ========= ========= ========= ========= EARNINGS BEFORE INCOME TAXES: Sales & Lease Ownership $ 4,196 $ 3,872 $ 11,556 $ 10,438 Rent-to-Rent 2,164 4,228 6,694 9,001 Franchise 2,261 1,749 4,430 3,443 Other (1,236) (245) (1,976) (542) Manufacturing (546) 711 (627) 1,423 --------- --------- --------- --------- Earnings before income taxes for reportable segments 6,839 10,315 20,077 23,763 Elimination of intersegment profit 331 (624) 599 (1,239) Cash to accrual adjustments 828 901 (876) (166) Other allocations and adjustments 585 560 --------- --------- --------- --------- Total earnings before income taxes $ 7,998 $ 11,177 $ 19,800 $ 22,918 ========= ========= ========= =========
7 PART I - FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Special Note Regarding Forward-Looking Information: Except for historical information contained herein, the matters set forth in this Form 10-Q are forward-looking statements. The Company notes that the forward-looking statements set forth involve a number of risks and uncertainties that could cause actual results to differ materially from any such statements, including the risks and uncertainties discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2000, filed with the Securities and Exchange Commission, under the caption "Certain Factors Affecting Forward Looking Statements," which discussion is incorporated herein by this reference. RESULTS OF OPERATIONS: QUARTER ENDED JUNE 30, 2001 VERSUS QUARTER ENDED JUNE 30, 2000: Total revenues for the second quarter of 2001 increased $10.9 million (8.9%) to $132.8 million compared to $121.9 million in 2000 due primarily to an $11.3 million (12.6%) increase in rentals and fees revenues, less a $674,000 (2.3%) decrease in sales. Of this increase in rentals and fees revenues, $15.7 million was attributable to the Aaron's Sales and Lease Ownership division. Rentals and fees revenues from the Company's rent-to-rent operations decreased $4.4 million during the same period. The increase in rental revenues in the sales and lease ownership division was attributable to new stores opened since the end of the second quarter last year (298 Company-operated sales and lease ownership stores open at the end of the second quarter of 2001 compared to 232 at the end of the second quarter of 2000) and an increase of 10.6% in comparable same store revenues. The decrease in rental revenues in the rent-to-rent operations was attributable to the reduction in stores open (91 rent-to-rent stores open at the end of the second quarter of 2001 compared to 99 at the end of the second quarter of 2000) and a decrease of 9.3% in comparable same store revenues. Revenues from retail sales for the second quarter 2001 increased $224,000 (1.5%) to $14.8 million compared to $14.5 million for the second quarter of 2000. This slight increase was primarily due to an $873,000 increase in rental return merchandise and new sales in the sales and lease ownership division partially offset by a $649,000 decrease in sales of rental return merchandise and new sales in the Company's rent-to rent operations. Non-retail sales, which primarily represent merchandise sold to Aaron's Sales and Lease Ownership franchisees, decreased $898,000 (6.2%) to $13.5 million compared to $14.4 million for the same period last year. The decrease in non-retail sales is primarily the result of less sales to sales and lease ownership franchisees due to the fewer number of franchise store openings with 15 stores opening in the first six months of 2001 compared to 25 in the comparable period last year. Other revenues for the second quarter of 2001 increased $247,000 (6.6%) to $4.0 million compared to $3.7 million in 2000. This increase was mainly attributable to fees and royalties from franchise operations increasing $479,000 (15.8%) to $3.5 million compared to $3.0 million last year, reflecting a net increase of 28 franchised stores since the end of the second quarter of 2000 and increasing operating revenues of maturing franchise stores partially offset by a decline of $232,000 in various other miscellaneous revenue accounts. 8 Cost of sales from retail sales increased $794,000 (7.8%) to $11.0 million for the second quarter 2001 compared to $10.2 million for the second quarter of 2000. Cost of sales as a percentage of retail sales increased to 74.5% from 70.1%. The increase of cost of sales as a percentage of retail sales is primarily due to the rent-to-rent operations reducing inventory levels by lowering retail prices. Cost of sales from non-retail sales decreased $639,000 (4.8%) to $12.8 million from $13.4 million, and as a percentage of non-retail sales, increased to 94.7% from 93.2%. Operating expenses increased $10.1 million (18.2%) to $65.7 million from $55.6 million. As a percentage of total revenues, operating expenses were 49.5% in 2001 and 45.6% in 2000. Operating expenses increased as a percentage of total revenues between quarters primarily due to costs associated with the acquisition of store locations formerly operated by one of the nation's largest furniture retailers along with other new store openings. Depreciation of rental merchandise increased $3.4 million (11.1%) to $33.6 million, from $30.2 million, and as a percentage of total rentals and fees, decreased to 33.4% from 33.9%. The decrease as a percentage of revenues is primarily due to the higher margins in the Aaron's Sales and Lease Ownership division. Interest expense increased $387,000 (29.4%) to $1.7 million compared to $1.3 million. As a percentage of total revenues, interest expense was 1.3% in 2001 compared to 1.1% in 2000. The increase in interest expense as a percentage of total revenues was due to higher debt levels in the second quarter of 2001. Income tax expense decreased $1.2 million (28.6%) to $3.0 million in the second quarter 2001 compared to $4.2 million for the same period last year. The Company's effective tax rate was 37.9% for the second quarter of 2001 compared to 38.0% in 2000. As a result, net earnings decreased $2.0 million (28.3%) to $5.0 million in the second quarter of 2001 compared to $6.9 million for the same period last year. As a percentage of total revenues net earnings were 3.7% in the current quarter as compared to 5.7% for the same period last year. The decrease was attributable to the significant revenue decline in the Company's rent-to-rent division as well as the start up costs associated with the accelerated store openings of former Heilig-Meyers stores which negatively affected earnings for the second quarter of 2001. The weighted average number of shares outstanding during the second quarter of 2001 was 19,911,000 compared to 19,790,000 (20,141,000 versus 19,905,000 assuming dilution) for the same period last year. SIX MONTHS ENDED JUNE 30, 2001 VERSUS SIX MONTHS ENDED JUNE 30, 2000: Total revenues for the first six months of 2001 increased $26.9 million (10.9%) to $274.2 million compared to $247.3 million in 2000 due primarily to a $25.8 million (14.6%) increase in rentals and fees revenues, plus a $413,000 (0.7%) increase in sales. Of this increase in rentals and fees revenues, $31.7 million was attributable to the Aaron's Sales and Lease Ownership division. Rentals and fees revenues from the Company's rent-to-rent operations decreased $5.9 million. The increase in rental revenues in the sales and lease ownership division was attributable to new stores opened since the end of the second quarter last year (298 Company-operated sales and lease ownership stores open at the end of the second quarter of 2001 compared to 232 at the end of the second quarter of 2000) and an average increase of 11.6% in comparable same store revenues for the first six months of 2001. The decrease in rental revenues in the rent-to-rent operations was attributable to the reduction in stores 9 open (91 rent-to-rent stores open at the end of the second quarter of 2001 compared to 99 at the end of the second quarter of 2000) and an average decrease of 4.9% in comparable same store revenues for the first six months of 2001. Revenues from retail sales increased slightly $195,000 (0.6%) to $32.0 million for the first six months of 2001 compared to $31.8 million for the same period last year. This slight increase was primarily due to $1.6 million increase in rental return merchandise and new sales in the sales and lease ownership division partially offset by a $1.4 million decrease in sales of rental return merchandise and new sales in the Company's rent-to-rent operation. Non-retail sales, which primarily represent merchandise sold to Aaron's Sales and Lease Ownership franchisees, increased $218,000 (0.7%) to $31.4 million compared to $31.2 million for the same period last year. The increased sales are due to the growth of the franchise operations. Other revenues for the first six months of 2001 increased $651,000 (8.7%) to $8.1 million compared to $7.5 million in 2000. This increase was attributable to fees and royalties from franchise operations increasing $1.1 million (17.9%) to $6.9 million compared to $5.9 million last year, reflecting a net increase of 28 franchised stores since the end of the second quarter of 2000 and increasing operating revenues of maturing franchise stores. Cost of sales from retail sales increased $783,000 (3.5%) to $23.2 million for the first six months of 2001 compared to $22.4 million for the same period last year. Cost of sales as a percentage of retail sales increased to 72.5% in 2001 compared to 70.4% last year. Cost of sales from non-retail sales increased $597,000 (2.1%) to $29.5 million from $28.9 million, and as a percentage of non-retail sales, increased to 93.8% from 92.6%. Operating expenses increased $20.3 million (18.1%) to $132.3 million from $112.0 million. As a percentage of total revenues, operating expenses were 48.2% in 2001 and 45.3% in 2000. Operating expenses increased as a percentage of total revenues between periods primarily due to costs associated with the acquisition of store locations formerly operated by one of the nation's largest furniture retailers along with other new store openings. Depreciation of rental merchandise increased $7.6 million (13.0%) to $66.1 million, from $58.5 million, and as a percentage of total rentals and fees, decreased to 32.6% from 33.1%. The decrease as a percentage of revenues is primarily due to the higher margins in the Aaron's Sales and Lease Ownership division. Interest expense increased $788,000 (31.0%) to $3.3 million compared to $2.5 million. As a percentage of total revenues, interest expense was 1.2% in 2001 compared to 1.0% in 2000. The increase in interest expense as a percentage of total revenues was due to higher debt levels in the first six months of 2001. Income tax expense decreased $1.2 million (13.9%) to $7.5 million for 2001 compared to $8.7 million for the same period in 2000. The Company's effective tax rate was 37.9% for the first six months of 2001 compared to 38.0% in 2000. As a result, net earnings decreased $1.9 million (13.5%) to $12.3 million in the first six months of 2001 compared to $14.2 million for the same period in 2000. As a percentage of total revenues, 10 net earnings were 4.5% in the current period as compared to 5.7% for the same period last year. The decrease was attributable to the significant revenue decline in the Company's rent-to-rent division as well as start up costs associated with the accelerated store openings which negatively affected earnings for the first six months of 2001. The weighted average number of shares outstanding during the first six months of 2001 was 19,891,000 compared to 19,845,000 (20,110,000 versus 19,998,000 assuming dilution) for the same period last year. LIQUIDITY AND CAPITAL RESOURCES: During the first six months of 2001, the Company paid a semi-annual dividend that was declared on November 9, 2000 of $.02 per share on both Common Stock and Class A Common Stock. On May 1, 2001, the Company declared a semi-annual dividend payable on July 6, 2001 of $.02 per share on both Common Stock and Class A Common Stock. Cash flow from operations for the first six months ended June 30, 2001 and 2000 was $80.7 million and $75.3 million, respectively. Such cash flows include profits on the sale of rental return merchandise. The Company's primary capital requirements consist of acquiring rental merchandise for both rent-to-rent stores and Company-operated Aaron's Sales and Lease Ownership stores. As the Company continues to grow, the need for additional rental merchandise will continue to be the Company's major capital requirement. These capital requirements historically have been financed through a revolving credit agreement, cash flow from operations, trade credit, proceeds from the sale of rental return merchandise, and stock offerings. On March 30, 2001 the Company entered into a new $110 million revolving credit agreement that includes an $8.0 million credit line to fund daily working capital requirements. At June 30, 2001, an aggregate of $94.0 million was outstanding under this facility, bearing interest at an average rate of 5.8%. The Company uses interest rate swap agreements as part of its overall long-term financing program. At June 30, 2001, the Company had swap agreements with notional principal amounts of $60.0 million which effectively fixed the interest rates on an equal amount under the Company's revolving credit agreement at 7.2%. The Company has issued $4,200,000 of industrial development corporation revenue bonds issued in the fourth quarter of 2000 to finance the purchase of a manufacturing facility. The borrowing rate on these bonds at June 30, 2001 was 2.85%. No principal payments are due on the bonds until maturity in 2015. The Company believes that the expected cash flows from operations, proceeds from the sale of rental return merchandise, bank borrowings and vendor credit, will be sufficient to fund the Company's capital and liquidity needs for the foreseeable future. RECENTLY ISSUED ACCOUNTING STANDARDS In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 142, "Goodwill and Other Intangible Assets", effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests in accordance with the Statement. Other intangible assets will continue to be amortized over their useful lives. 11 The Company will apply the new rules on accounting for goodwill and other intangible assets beginning in the first quarter of 2002. During 2002, the Company will apply the non-amortization provisions and perform the first of the required impairment tests of goodwill and indefinite lived intangible assets as of January 1, 2002. The Company has not yet determined what effect the statement will have on the earnings and financial position of the Company. 12 PART II - OTHER INFORMATION Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of Shareholders was held on May 1, 2001 in Atlanta , Georgia, at which the following matters were submitted to a vote of the shareholders: Votes cast for or withheld regarding the election of ten (10) Directors for a term of one (1) year were as follows:
Name of Nominee For Withheld --------------- ----------------------------- R.C. Loudermilk, Sr. 3,442,180 331,220 Robert C. Loudermilk, Jr. 3,442,185 331,215 Gilbert L. Danielson 3,442,185 331,215 Ronald W. Allen 3,726,485 46,915 Leo Benatar 3,726,485 46,915 Earl Dolive 3,726,485 46,915 J. Rex Fuqua 3,440,105 333,295 Ingrid Saunders Jones 3,726,485 46,915 M. Collier Ross 3,726,485 46,915 William K. Butler, Jr. 3,726,485 46,915
Votes cast for, against or abstained regarding the approval of the 2001 Stock Option and Incentive Plan were as follows: Voting For 3,409,300 Voting Against 363,500 Abstain From Voting 600 ----------- Total 3,773,400 =========== Votes cast for, against or abstained regarding the approval of the Stock Option Grants were as follows: Voting For 3,459,780 Voting Against 313,020 Abstain From Voting 600 ------------ Total 3,773,400 ============ ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K: (b) No reports on Form 8-K were filed by the Registrant during the quarter ended June 30, 2001. 13 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 - August 14, 2001 /s/ Gilbert L. Danielson ------------------------ Gilbert L. Danielson Executive Vice President Chief Financial Officer Date - August 14, 2001 /s/ Robert P. Sinclair, Jr. --------------------------- Robert P. Sinclair, Jr. Vice President Corporate Controller