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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE YEAR ENDED COMMISSION FILE NO.
December 31, 2000 0-12385
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)
Registrant's telephone number, including area code: (404) 231-0011
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS
Common Stock, $.50 Par Value
Class A Common Stock, $.50 Par Value
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
Aggregate market value of the voting and non-voting common stock held by
non-affiliates of the registrant as of March 22, 2001: $231,355,099 See Item 12.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
SHARES OUTSTANDING AS OF
TITLE OF EACH CLASS MARCH 22, 2001
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Common Stock, $.50 Par Value 16,041,161
Class A Common Stock, $.50 Par Value 3,829,506
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 2000 Annual Report to Shareholders for the year ended
December 31, 2000 are incorporated by reference into Part II of this Form 10-K.
Portions of the registrant's definitive proxy statement for the 2001 annual
meeting of shareholders are incorporated by reference into Part III of this Form
10-K.
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PART I.
ITEM 1. BUSINESS
GENERAL
Aaron Rents, Inc. is a U.S. leader in the sales & lease ownership and
rent-to-rent industries with 554 stores in 42 states and Puerto Rico. The
Company offers both individual and business customers a wide range of
residential and office furniture, accessories, consumer electronics, and
household appliances for lease, rental, and sale. The Company's major operating
divisions are the Aaron's Sales & Lease Ownership division, (formerly Aaron's
Rental Purchase division) the Aaron Rents' Rent-to-Rent division, and the
MacTavish Furniture Industries division, which manufactures much of the
furniture rented and/or sold in the Company's stores. Aaron Rents' strategic
focus is on expanding its higher growth sales & lease ownership business while
also growing its rent-to-rent business in selected markets.
At December 31, 2000, Aaron Rents had 361 Company-operated stores and 193
franchised stores in 42 states and Puerto Rico. There were 263
Company-operated sales & lease ownership stores in its Aaron's Sales & Lease
Ownership division, 193 Aaron's Sales & Lease Ownership franchised stores and 98
rent-to-rent stores in its Aaron Rents' Rent-to-Rent division.
The Aaron's Sales & Lease Ownership division focuses on providing durable
household goods to lower to middle income consumers with limited or no access to
traditional credit sources such as bank financing, installment credit or credit
cards. The Company's sales & lease ownership program allows customers to obtain
merchandise without incurring additional debt or long-term obligations.
Management believes that the segment of the U.S. population which its sales &
lease ownership division targets is large and that the needs of these customers
generally are underserved.
In 1992 the Company began franchising Aaron's Sales & Lease Ownership stores in
selected markets where the Company has no immediate plans to enter. The Company
believes that its franchise program allows the Company to grow more quickly,
increase its name exposure in new markets and achieve economies of scale in
purchasing, manufacturing and advertising for its sales & lease ownership
stores. The Company opened 40, 41 and 47 franchised sales & lease ownership
stores in 1998, 1999 and 2000, respectively.
The Aaron Rents' Rent-to-Rent division is well-positioned to take advantage of
the growing demand for furniture rental services. Management believes this
demand to be driven by continued growth in employment, the increasing importance
of flexibility and outsourcing to American businesses and the impact of a more
mobile and transitory population. Business customers, which represent an
increasing portion of rental customers, enter into leases for office furniture
to meet seasonal, temporary or start-up needs. Business customers also lease
residential furniture in order to provide furnishings for relocated employees or
those on temporary assignment.
The Company is the only major rental furniture company in the United States that
manufactures its own furniture. By manufacturing its own specially designed
residential and office furniture through its MacTavish Furniture Industries
division, the Company enjoys an advantage over many of its competitors.
Manufacturing enables the Company to control the quality, cost, timing, styling
and quantity of its furniture rental products. The Company operates six
furniture plants, four bedding facilities and one lamp manufacturing facility,
which supply approximately one half of the furniture and related accessories
rented or sold by the Company.
The Company has grown significantly in recent years. Its growth is attributed to
the opening of Company-operated and franchised sales & lease ownership stores,
as well as to the expansion of its rent-to-rent business and selected
acquisitions. Total revenues have increased from $237.8 million for calendar
year 1995 to $502.9 million for calendar year 2000, and earnings before income
taxes increased from $21.3 million in calendar year 1995 to $43.9 million in
2000, representing a 16.2% and 15.6% compound annual growth rate in the
Company's revenues and earnings before income taxes, respectively. The increase
in revenues was driven by a significant increase in sales & lease ownership
revenues, which increased from $90.1 million for 1995 to $325.8 million for
2000, representing a 29.3% compound annual growth rate.
The Company believes it possesses a valuable brand name in the rental business,
as well as operating characteristics which differentiate it from its
competitors. For instance, the Company's sales & lease ownership concept is
unique in offering 12-month lease ownership agreements, larger and more
attractive store showrooms and a wider selection of merchandise. In the
rent-to-rent business, the Company believes that its ability to deliver
residential and office furniture and equipment to its customers quickly and
efficiently gives the Company an advantage over furniture retailers who often
require several weeks to effect delivery. By having its own
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manufacturing capabilities, an extensive distribution network and sophisticated
management information systems, the Company is well-positioned to meet the
distinct needs of its sales & lease ownership and rent-to-rent customers.
INDUSTRY OVERVIEW
The Rent-to-Own Industry
According to the Association of Progressive Rental Organizations ("APRO"), the
national trade association representing the rent-to-own industry, there are
approximately 8,000 rent-to-own stores in the United States. Industry-wide
revenues are believed to be approximately $5.0 billion.
In a typical rent-to-own transaction, the customer has the option to acquire
merchandise over a fixed term, usually 18 to 24 months, by making weekly rental
payments. The customer may cancel the agreement at any time by returning the
merchandise to the store, with no further rental obligation. The average rental
period in the industry is about four months, because the majority of customers
do not rent the item to the full term of the agreement. If the customer rents
the item to the full term, he obtains ownership of the item, though he has the
option to purchase it at any time.
The rent-to-own industry is a growing segment of the retail industry that offers
an alternative to traditional methods of acquiring furniture, electronics and
appliances. The rent-to-own concept is particularly popular with consumers who
are unable to pay for merchandise in cash or who lack the credit to qualify
under conventional financing programs. It is also popular with consumers who,
despite good credit, do not wish to incur additional debt, have only a temporary
need for the merchandise, or desire to try out a particular brand or model
before purchasing it. Historically, electronic goods have been the dominant
product category rented and sold in the industry although furniture items are
growing in popularity.
The Company believes its sales & lease ownership concept differs significantly
from the typical rent-to-own program. Compared to typical rent-to-own stores,
Aaron's Sales & Lease Ownership stores offer shorter agreement terms which are
payable on a monthly basis and have generally lower total payments to acquire
merchandise. Aaron's Sales & Lease Ownership stores offer a larger selection of
merchandise in general and of furniture merchandise in particular, and have a
larger and more visually appealing store layout. The Company believes that its
sales & lease ownership customers demand both higher quality merchandise and
more competitive pricing on total agreement terms compared to the typical
rent-to-own customer.
The Company's sales & lease ownership transactions differ from sales by home
furnishings retailers in that sales & lease ownership allows the option, but not
the obligation, to purchase merchandise while paying a similar "all-in"
agreement price. Sales & lease ownership allows the customer to have the item
serviced free of charge or replaced at any time during the rental agreement, and
allows the Company to re-rent an item to another customer if the agreement does
not go to term.
The Company's sales & lease ownership operations differ from the rent-to-rent
business. A typical sales & lease ownership customer, while usually lacking the
cash or credit resources to acquire merchandise, desires the option of ownership
and may have the intention to utilize sales & lease ownership to achieve
ownership. Accordingly, in sales & lease ownership transactions, the customer is
willing to pay a higher monthly payment for the ownership option, as compared to
the rent-to-rent customer. Typically, the Company's sales & lease ownership
customers are more style and brand name conscious than rent-to-rent customers
who regard the merchandise as temporary. Aaron's Sales & Lease Ownership stores
are attractively appointed and are typically in or near a shopping center
strategically located near the residences of its target customers, as opposed to
the rent-to-rent store whose typical location is in an office park that services
destination customers from a broad geographical area.
The Rent-to-Rent Industry
The furniture component of the rent-to-rent industry is estimated to be greater
than $600 million in annual rental revenues. The demand for rental products is
believed to be related to the mobility of the population, which relies upon
rented merchandise to fulfill temporary needs. The industry is highly
competitive and consolidating, with only a handful of companies accounting for a
substantial share of the market.
The rent-to-rent industry serves both individual and business customers who
generally have immediate, temporary needs for office or residential merchandise
but who generally do not seek to own the merchandise. Residential merchandise is
rented to individuals seeking to rent merchandise for their own homes and
apartments, apartment complex managers seeking to provide furnished apartments,
and third party companies that provide interim housing for their corporate
clients. Office merchandise is rented by
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customers ranging from small businesses and professionals who are in need of
office furnishings but need to conserve capital, to large corporations with
temporary or seasonal needs.
In the typical rent-to-rent transaction, the customer agrees to rent one or more
items for a minimum of three months, which may be extended by the customer on a
month-to-month basis. Although many rental agreements give the customer the
option of purchasing the rented item, most customers do not enter into the
transaction with the desire to own the rented merchandise.
GROWTH AND OPERATING STRATEGIES
Aaron Rents is expanding its business through growth strategies that focus on
the opening of additional Company-operated rent-to-rent and sales & lease
ownership stores, and franchised sales & lease ownership stores. In addition,
the Company seeks to enhance profitability through operating strategies which
differentiate the Company from its competitors and improve operating
efficiencies. The key elements of the Company's growth and operating strategies
are summarized below.
Growth Strategies
- - EXPAND COMPANY-OPERATED SALES & LEASE OWNERSHIP OPERATIONS IN SELECTED
GEOGRAPHIC MARKETS. The Company's strategy is to open sales & lease ownership
stores in the Company's existing and selected new geographic markets where it
can cluster stores to realize the benefits of economies of scale in marketing
and distribution and other operating efficiencies. In accordance with this
strategy the Company acquired at the end of 2000 a total of 26 store locations
formerly operated by one of the nation's largest furniture retailers, providing
the opportunity to accelerate store-opening plans in the first two quarters of
2001 by serving a customer base already familiar with those locations.
- - EXPAND AARON'S SALES & LEASE OWNERSHIP FRANCHISE PROGRAM. The Company uses
its franchise program to place Aaron's Sales & Lease Ownership stores primarily
in selected markets where the Company has no immediate plans to enter. The
Company believes that its franchise program allows the Company to grow more
quickly and increase its name exposure in new markets. In addition, the larger
number of systemwide sales & lease ownership stores enables the Company and its
franchisees to realize economies of scale in purchasing, manufacturing and
advertising for its sales & lease ownership stores. Franchise fees and royalties
also represent a growing source of revenues for the Company.
- - EXPAND RENT-TO-RENT OPERATIONS. The Company believes that there are growth
opportunities in the rent-to-rent market, particularly in the business sector.
In 2000, Rent-To-Rent's office division had a large increase of customers that
leased and purchased office systems. The division has adapted its sales and
marketing efforts to gain additional share of the office division market. The
Company believes that its rent-to-rent business will continue to provide the
Company with cash flow to finance a significant amount of the planned expansion
of the Aaron's Sales & Lease Ownership division.
Operating Strategies
- - PROVIDE HIGH LEVELS OF CUSTOMER SERVICE AND SATISFACTION. The Company
demonstrates its commitment to superior customer service by providing large,
attractive and conveniently located showrooms, offering a wide selection of
quality merchandise at competitive prices and flexible acquisition options, and
providing customers quick delivery of rented merchandise, in many cases by same
or next day delivery. The Company has established an employee training program
designed to enhance the customer relations skills of its employees.
- - DIFFERENTIATE AARON'S SALES & LEASE OWNERSHIP CONCEPT. The Company believes
that the success of its sales & lease ownership operations is attributable to
its distinctive approach to the business that sets it apart from its rent-to-own
and credit retail competitors. The Company has pioneered innovative approaches
to meeting changing customer needs that differ from those of its competitors -
such as offering 12-month lease ownership agreements which result in a lower
"all-in" price, larger and more attractive store showrooms, and a wider
selection of merchandise. Most sales & lease ownership customers make their
payments in person, and the Company uses these frequent visits to strengthen
customer relationships and make sales & lease ownership customers feel welcome
in the Company's stores.
- - TARGET RENT-TO-RENT BUSINESS CUSTOMERS. The Company has successfully
operated rent-to-rent stores for over 40 years, using its superior customer
service, prompt delivery and wide selection of rental furniture to attract a
growing number of business customers. The Company believes that its ability to
deliver furniture and equipment to its business customers quickly and
efficiently gives the Company an advantage over general furniture retailers who
often require several weeks to effect delivery. In addition, the location of a
warehouse next to each showroom permits the store manager to exercise greater
control over inventory, merchandise condition and pickup and deliveries,
resulting in more efficient and consistent service for the customer.
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- - MANAGE FURNITURE REQUIREMENTS THROUGH MANUFACTURING AND DISTRIBUTION. The
Company believes that its furniture manufacturing capability and distribution
center network give it a strategic advantage over its competitors by enabling
the Company to control the quality, cost, timing, styling, durability and
quantity of a substantial portion of its rental furniture merchandise. This
control allows the Company to offer prompt delivery of rented furniture and
provides the Company a reliable source of rental furniture.
- - UTILIZE PROPRIETARY MANAGEMENT INFORMATION SYSTEMS. The Company has
developed proprietary computerized information systems to systematically pursue
cash collections and merchandise returns and to match inventory with demand.
Each of the Company's stores, including franchised sales & lease ownership
stores, is linked by computer directly to corporate headquarters, which enables
headquarters to monitor the performance of each store on a daily basis. Its
separate systems are tailored to meet the distinct needs of the Company's sales
& lease ownership and rent-to-rent operations.
OPERATING DIVISIONS
Sales & Lease Ownership - Aaron's Sales & Lease Ownership
The Company established its Aaron's Sales & Lease Ownership division in 1987. At
December 31, 2000, there were 263 Company-operated Aaron's Sales & Lease
Ownership stores in 24 states and 193 franchised Aaron's Sales & Lease Ownership
stores in 37 states. The Company has developed a distinctive concept for its
Aaron's Sales & Lease Ownership stores with specific merchandising selection and
store layout, pricing and agreement terms for the customers it seeks to attract.
The Company believes that these features create a store and sales & lease
ownership concept that is significantly different from the operations of most
other rent-to-own stores, the Company's traditional rent-to-rent business, and
the operations of home furnishings retailers who finance merchandise.
The typical Aaron's Sales & Lease Ownership store layout consists of a
combination showroom and warehouse of 8,000 to 10,000 square feet, with an
average of approximately 9,000 total square feet. In selecting new locations for
Aaron's Sales & Lease Ownership stores, the Company generally looks for sites in
well-maintained strip shopping centers strategically located within ten miles of
established working class neighborhoods and communities with good access. Many
of the Company's stores are placed near existing stores of competitors. Each
sales & lease ownership store maintains at least two trucks and crews for
pickups and deliveries, and generally offers same or next day delivery for
addresses located within 15 miles of the store. The Company emphasizes a broad
selection of brand name products for its electronics and appliance items, and
offers customers a wide selection of furniture, including furniture manufactured
by the Company's MacTavish Furniture Industries division. Aaron's Sales & Lease
Ownership stores also offer computers and jewelry.
Aaron's Sales & Lease Ownership stores structure the pricing of merchandise to
be less expensive than similar items offered by other rent-to-own operators, and
substantially equivalent to the "all-in" contract price of similar items offered
by home furnishings retailers who finance merchandise. Approximately 79% of the
Company's sales & lease ownership agreements have monthly payments as compared
to the industry standard weekly payments, and most monthly agreements are for 12
months compared to the industry standard of 18 to 24 months of weekly payments.
Approximately 40% of Aaron's Sales & Lease Ownership agreements go to term in
which the customer obtains ownership of the merchandise in contrast to an
industry average of less than 25%. The merchandise from the agreements that do
not go to term is either re-rented or sold.
Aaron's Sales & Lease Ownership Franchise Program
The Company began franchising Aaron's Sales & Lease Ownership stores in selected
markets in 1992, and has continued to attract many franchisees. It is not
anticipated that franchised stores will compete with Company-operated stores, as
franchises are primarily awarded in markets into which the Company has no
presence and no current plans to expand. As of December 31, 2000, 339 franchises
had been sold to 68 franchisees, and 193 franchise stores were open. The Company
believes that its relations with its franchisees are good.
Franchisees are approved on the basis of the applicant's business background and
financial resources. The Company generally seeks franchisees who will enter into
development agreements for several stores, although many franchisees currently
operate a single store. Most franchisees are involved in the day-to-day
operations of the stores.
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The Company enters into franchise agreements with its franchisees to govern the
opening and operation of franchised stores. Under the Company's current
agreement, the franchisee is required to pay a franchise fee of $35,000 per
store. Agreements are for a term of 10 years (with one 10-year renewal option)
and require payment to the Company of a royalty of 5% of weekly cash
collections.
The Company assists each franchisee in selecting the proper site for each store.
Because of the importance of location to the Aaron's Sales & Lease Ownership
concept, one of the Company's Pre-Opening Directors visits the intended market
and helps guide the franchisee through the selection process. Once a site is
selected, the Company helps in designing the floor plan, including the proper
layout of the showroom and warehouse. In addition, the Company provides
assistance in assuring that the design and decor of the showroom is consistent
with the Company's requirements. The Company also leases the exterior signage to
the franchisee, and assists with placing pre-opening advertising, ordering
initial inventory and obtaining delivery vehicles.
The Company has an arrangement with a syndicate of banks to provide financing to
qualifying franchisees to assist with the establishment and operation of their
stores. A primary component of the financing program is an inventory financing
plan which provides franchisees with the capital to purchase inventory. For
qualified established franchisees, the Company has arranged for these
institutions to provide a revolving credit line to allow franchisees the
flexibility to expand. The Company guarantees a portion of amounts outstanding
under the franchisee financing programs.
All franchisees are required to complete a comprehensive training program and to
operate their franchised Aaron's Sales & Lease Ownership stores in compliance
with the Company's policies, standards and specifications, including such
matters as decor, rental agreement terms, hours of operation, pricing and
merchandise. Franchisees are not required to purchase their rental merchandise
from the Company, although many do so in order to take advantage of bulk
purchasing discounts and favorable delivery terms. Many also purchase their
rental furniture from the Company's MacTavish Furniture Industries facilities.
The Company conducts a financial audit of its franchise stores every six to 12
months and also conducts regular operational audits, generally visiting each
franchise store almost as often as it visits its Company-owned stores. In
addition, the Company's proprietary management information system links each
store to corporate headquarters.
Rent-to-Rent - Aaron Rents and Sells Furniture
The Company has been in the rent-to-rent business for over 40 years and is the
second largest furniture rent-to-rent company in the United States. The core
rent-to-rent business accounted for approximately 35% of the Company's total
revenues for the year ended December 31, 2000. The Company rents new and rental
return merchandise to both the individual and the business segments of the
rent-to-rent industry, with a growing focus on rentals of residential and office
furniture to business customers. As of December 31, 2000, the Company operated
98 rent-to-rent stores in 21 states.
The Company's typical rent-to-rent store layout consists of a combination
showroom and warehouse comprising about 19,000 square feet. Each residential
showroom features attractive displays of dining-room, living-room and bedroom
furniture in a number of styles, fabrics, materials and colors. Office rental
showrooms feature lines of desks, chairs, conference tables, credenzas, sofas
and accessories. The Company believes that having a warehouse next to each
showroom permits the store manager to exercise greater control over inventory,
merchandise condition and pickup and deliveries, resulting in more efficient and
consistent service for the customer.
Items held for rent, whether new or rental return, are available for purchase
and lease purchase at all rent-to-rent stores. Each rent-to-rent store generally
offers next day delivery for addresses located within 50 miles of the store, and
maintains at least one truck and a crew for pickups and deliveries. The Company
believes that its ability to obtain and deliver office furniture and equipment
to its customers quickly and efficiently gives the Company an advantage over
general office furniture retailers who often require several weeks to effect
delivery.
The Company generally sells rental return merchandise at its stores at or above
its book value (cost less depreciation) plus selling expenses, a price which is
usually considerably lower than the price for comparable new merchandise. Most
merchandise held for sale in stores may also be acquired through a lease
purchase option. Because new merchandise is sold at the same location as rental
return merchandise, the Company has the opportunity to sell both new and rental
return merchandise to customers who may have been attracted to the store by the
advertising and price appeal of rental return merchandise. The ability to sell
new and rental return merchandise at the same location allows for more efficient
use of facilities and personnel and minimizes overhead.
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FURNITURE MANUFACTURING
The Company believes that its manufacturing capability gives it a strategic
advantage over its competitors by enabling the Company to control the quality,
cost, timing, styling, durability and quantity of its furniture rental products.
As the only major furniture rental company that manufactures its own furniture,
the Company believes its 707,000 square feet of manufacturing facilities provide
it more flexibility in scheduling production runs and in meeting inventory needs
than rental companies that do not manufacture their own furniture and are
dependent upon third party suppliers. The Company's MacTavish Furniture
Industries division has manufactured furniture for the Company's stores since
1971. The division has six furniture manufacturing plants, four bedding
manufacturing facilities and one lamp manufacturing facility which supply
approximately one half of the furniture and accessories rented or sold by the
Company. The Company's manufacturing plants have the capacity to meet the
Company's needs for the foreseeable future. The Company also manufactures lamps
for selected national retailers.
MacTavish Furniture Industries manufactures upholstered living-room furniture
(including contemporary sofas, sofabeds, chairs and modular sofa and ottoman
collections in a variety of natural and synthetic fabrics and leathers), bedding
(including standard sizes of mattresses and box springs), and office furniture
(including desks, credenzas, conference tables, bookcases and chairs). MacTavish
has designed special features for the furniture it manufactures which make its
furniture less expensive to produce, more durable and better equipped for
frequent transportation than furniture purchased from third parties. These
features include standardization of components; reduction of parts and features
susceptible to wear or damage; more resilient foam; durable, soil-resistant
fabrics and sturdy frames for longer life and higher residual value; and devices
which allow sofas to stand on end for easier and more efficient transport.
MacTavish also manufactures replacement covers of all styles and fabrics of its
upholstered furniture for use in reconditioning rental return furniture.
The principal raw materials used by MacTavish in furniture manufacturing are
fabric, foam, fiber, wire-innerspring assemblies, plywoods and hardwoods. All of
these materials are purchased in the open market from sources not affiliated
with the Company. The Company is not dependent on any single supplier, and none
of the raw materials are in short supply.
STORE OPERATIONS
Management
The Aaron's Sales & Lease Ownership division has nine regional managers
supervised by two vice presidents who are primarily responsible for monitoring
individual store performance and inventory levels within the respective regions.
The Company's rent-to-rent stores are organized geographically into three
residential and three office regions, each supervised by a vice president.
Presidents manage the sales & lease ownership, residential rent-to-rent, and
office rent-to-rent divisions.
Stores are directly supervised by 48 sales & lease ownership district/city
managers and 18 rent-to-rent regional managers. At the individual store level,
the store manager is responsible for customer and credit relations, deliveries
and pickups, warehouse and inventory management, and certain marketing efforts.
Store managers are also responsible for inspecting rental return furniture to
determine whether it should be sold as is, rented again as is, repaired and
sold, or reconditioned for additional rental. A significant portion of the store
manager's compensation is dependent upon store revenues and profits.
Executive management at the Company's headquarters directs and coordinates
purchasing, financial planning and control, manufacturing, employee training,
and new store site selection for the Company-operated stores. The Company's
internal audit department conducts periodic audits of every store, including
audits of Company-operated sales & lease ownership stores several times each
year, and semi-annual audits of rent-to-rent stores and franchised sales & lease
ownership stores. The Company's business philosophy has always emphasized strict
cost containment and fiscal controls. Executive and store level management
monitor expenses vigilantly to contain costs. All invoices are paid out of the
Company's headquarters in order to enhance fiscal accountability. The Company
believes that its careful attention to the expense side of its operations has
enabled it to maintain financial stability and profitability.
Management Information Systems
The Company utilizes computer-based management information systems to facilitate
cash collections, merchandise returns and inventory monitoring. Through the use
of proprietary software developed by the Company, each of the Company's stores
is linked by computer directly to corporate headquarters, which enables
headquarters to monitor the performance of each store on a daily basis. A
different system is used to run the sales & lease ownership and rent-to-rent
operations due to the significant differences in the
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businesses. At the store level, the store manager is better able to track
inventory on the showroom floor and in the warehouse to minimize delivery times,
assist with product purchasing and match customer needs with available
inventory.
Rental Agreement Approval, Renewal and Collection
One of the keys to the success of the Company's Aaron's Sales & Lease Ownership
operations is its ability to achieve timely cash collections. Individual store
managers utilize the Company's computerized information system on a daily basis
to track cash collections. They contact customers within a few days of when
their lease payments are due in order to encourage customers to keep their
agreement current and in force (rather than having to return the merchandise for
non-payment) and to renew their agreements for an additional period. Careful
attention to cash collections is particularly important in the sales & lease
ownership operations, where the customer typically has the option to cancel the
agreement at any time and each payment is considered a renewal of the agreement
rather than a collection of a receivable.
Each rent-to-rent store performs a credit check on most of its residential and
business customers. The Company generally performs no formal credit check with
respect to sales & lease ownership customers other than to verify employment or
other reliable sources of income and personal references supplied by the
customer. All of the Company's agreements for residential and office merchandise
require payments in advance, and the merchandise normally is picked up if a
payment is significantly in arrears.
Net bad debt losses from rent-to-rent rentals as a percentage of rent-to-rent
rental revenues were approximately 2.1%, 1.9%, and 2.0% for the years ended
December 31, 2000, 1999 and 1998. The Company does not extend credit to sales &
lease ownership customers. For the same periods, net merchandise shrinkage for
the Company as a percentage of combined rental revenues was 2.5%, 2.2% and 2.4%,
respectively. The Company believes that its collection and repossession policies
comply with applicable legal requirements, and the Company disciplines any
employee that it discovers deviating from such policies.
Customer Service
The Company believes that customer service is one of the most important elements
in the success of its sales & lease ownership and rent-to-rent businesses.
Customer satisfaction is critical because the customer usually has the option of
returning the rented merchandise at any time. The Company's goal is to make its
customers feel positive about the Company and its products from the moment they
enter the Company's showrooms. Items are serviced at no charge to the customer,
and quick, free delivery is available in many cases. In order to increase
rentals at existing stores, the Company fosters relationships with existing
customers to attract recurring business, and many new rental and lease ownership
agreements are attributable to repeat customers.
Because of the importance of customer service, the Company believes that a
prerequisite for successful operations and growth is skilled, effective
employees who value the Company's customers and project a genuine desire to
serve the customers' needs. The Aaron Sales & Lease Ownership division has nine
training facilities where store managers and employees cover all areas of the
Company's operations, with a heavy emphasis on customer service. The
rent-to-rent division's sales and management training programs have similar
training conducted at the Company's Atlanta headquarters. The Company's policy
of promoting from within aids in employee retention and commitment to the
Company's customer service and other business philosophies, which also allows
the Company to realize greater benefits from its employee training programs.
PURCHASING AND DISTRIBUTION
The Company's product mix is determined by store managers in consultation with
the regional managers and regional vice presidents, based on an analysis of
customer demands. In the Company's rent-to-rent division, furniture is the
primary merchandise category, accounting for approximately 93% of rent-to-rent
rental revenues for the year ended December 31, 2000. In the Aaron's Sales &
Lease Ownership division, electronics and appliances, furniture, computers and
other accounted for approximately 57%, 35%, 6%, and 2%, respectively, of sales &
lease ownership revenues for the year ended December 31, 2000. With approval
from the applicable operating management, store managers send their orders to
the sales & lease ownership or rent-to-rent purchasing department at
headquarters. The applicable purchasing department reviews all purchase orders
to determine whether merchandise needs may be satisfied out of existing
inventory at other stores before contacting vendors. If inventory is available
at other stores, the purchasing department arranges for inventory shipments
between stores. Virtually all merchandise for the Company's stores is purchased
by the Company's seven buyers, five of whom are solely responsible for sales &
lease ownership merchandise.
The Company purchases the majority of its merchandise directly from
manufacturers, with the balance from local distributors. The Company's largest
supplier is its MacTavish Furniture Industries manufacturing division, which
supplies approximately one half of the
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furniture rented or sold by the Company. The Company has no long-term agreements
for the purchase of merchandise and believes that its relationships with
suppliers are excellent.
Rent-to-rent stores receive merchandise directly from vendors who ship to the
stores' attached warehouses. Sales & lease ownership operations utilize
distribution centers to control inventory. All sales & lease ownership stores
order directly from the Company's six distribution centers located in
Auburndale, Florida; Dallas and Houston, Texas; Duluth, Georgia; Columbus, Ohio;
and Baltimore, Maryland with several other distribution centers to be opened in
other regions of the United States in 2001. Sales & lease ownership stores
typically have smaller warehouses with less inventory storage space than the
Company's rent-to-rent stores. Vendors ship directly to the distribution
centers.
Distribution centers result in freight savings from truckload discounts and a
more efficient distribution of merchandise. The Company utilizes its
tractor-trailers, local delivery trucks, and various contract carriers to make
weekly deliveries to individual stores.
MARKETING AND ADVERTISING
In its sales & leasing operations, the Company relies heavily on national and
local television advertising, direct mail and direct delivery of promotional
materials. The Company focuses its television advertising on its highly
successful "Dream Products" program. This program targets "dream" products such
as large-screen televisions, home theater systems, leather upholstery, stainless
steel refrigerators and top brand name washers and dryers. To help promote the
Dream Products program the Company established a relationship with NASCAR, which
reaches a prime audience in its demographic. The initial relationship was the
title sponsorship of the NASCAR Busch Grand National Car Race at the Atlanta
Motor Speedway- the nationally televised "Aaron's 312", named for Aaron's three
ways to obtain merchandise and its unique 12-month plan. The second relationship
established was a limited sponsorship of driver Michael Waltrip's #99 Aaron's
Dream Machine in the Busch Grand National Series. The final relationship was a
sponsorship of driver Johnny Benson's #10 Aaron's Dream Machine for the last
half of the 2000 NASCAR Winston Cup Series. Sponsorship of Atlanta Braves games
and other sports events also reach this market. Sales & lease ownership stores
are located within neighborhood communities, and will typically distribute mass
mailings of promotional material every two weeks, with the goal of reaching
households within a specified radius of each store at least 12 times per year.
In addition, delivery personnel are trained to leave promotional material at the
door of each residence within five doors of the delivery destination. In
concentrated geographic markets, and for special promotions, the Company also
utilizes local television and radio advertising for special promotions.
The Company markets its rent-to-rent operations through its outside sales staff
to the local apartment communities, calling on their leasing agents, resident
managers, and property managers. This group heavily influences the individual
referral business as well as the corporate relocation professionals. The Company
also markets to interim housing providers (that offer temporary housing) to
corporations that relocate personnel around the country. The Company has a
regional and national marketing staff that focuses on this growing segment of
the rent-to-rent industry. The Company also relies on the use of brochures,
newspapers, radio, television, direct mail, trade publications, yellow pages,
and the internet (http://www.aaronrentsfurniture.com; www.aaronrents.com;
www.shopaarons.com) to reach its customers and believes such advertising
increases the Company's name recognition.
COMPETITION
The Company's businesses are highly competitive. The Company competes in the
rent-to-rent market with national and local companies and, to a lesser extent,
with apartment owners who purchase furniture for rental to tenants. The Company
believes that CORT Business Services Corporation and Globe Business Resources,
Inc. are its most significant rent-to-rent competitors. The Company also
competes in the rent-to-own and credit retail markets. The Company's two largest
competitors in the rent-to-own market are Rent-A-Center, Inc. and Rent-Way, Inc.
Heilig-Meyers Furniture is the Company's main competitor in the credit retail
market.
Although definitive industry statistics are not available, management believes
that the Company is one of the largest furniture rental companies in the United
States. Management also believes that it generally has a favorable competitive
position in that industry because of its manufacturing capabilities, prompt
delivery, competitive pricing, name recognition and commitment to customer
service.
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GOVERNMENT REGULATION
The Company believes that 46 states specifically regulate rent-to-own or sales &
lease ownership transactions, including states in which the Company currently
operates Aaron's Sales & Lease Ownership stores. Most of these states have
enacted disclosure laws which require rent-to-own companies to disclose to its
customers the total number of payments, total amount and timing of all payments
to acquire ownership of any item, any other charges that may be imposed by the
Company and miscellaneous other items. The most restrictive states limit the
total amount that a customer may be charged for an item to twice the "retail"
price for the item, or regulate the amount of "interest" that rent-to-own
companies may charge on rent-to-own transactions, generally defining "interest"
as rental fees paid in excess of the "retail" price of the goods. The Company's
long-established policy in all states is to disclose the terms of its sales &
lease ownership transactions as a matter of good business ethics and customer
service.
At the present time, no federal law specifically regulates the rent-to-own
industry. Federal legislation has been proposed from time to time to regulate
the industry. Management cannot predict whether any such legislation will be
enacted and what the impact of such legislation would be. Although the Company
is unable to predict the results of these or any additional regulatory
initiatives, the Company does not believe that the existing and proposed
regulations will have a material adverse impact on the Company's sales & lease
ownership or other operations.
The Company's Aaron's Sales & Lease Ownership franchise program is subject to
Federal Trade Commission ("FTC") regulation and various state laws regulating
the offer and sale of franchises. Several state laws also regulate substantive
aspects of the franchisor-franchisee relationship. The FTC requires the Company
to furnish to prospective franchisees a franchise offering circular containing
prescribed information. A number of states in which the Company might consider
franchising also regulate the sale of franchises and require registration of the
franchise offering circular with state authorities. The Company believes it is
in material compliance with all applicable franchise laws.
EMPLOYEES
At December 31, 2000, the Company had approximately 3,900 employees. None of the
Company's employees are covered by a collective bargaining agreement, and the
Company believes that its relations with its employees are good.
CERTAIN FACTORS AFFECTING FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-K contains certain forward-looking statements (as
such term is defined in the Securities Act of 1933 as amended), which represent
expectations or beliefs, including but not limited to, statements concerning
industry performance, and the Company's operations, performance and financial
condition, including, in particular, the likelihood of the Company's success in
developing and expanding its business. These statements are based upon a number
of assumptions and estimates which are inherently subject to significant
uncertainties, many of which are beyond the control of the Company. Actual
results may differ materially from those expressed or implied by such
forward-looking statements. Factors that could cause actual results to differ
materially include, but are not limited to, those set forth below.
Risks Associated with Expansion Strategy
An important part of the Company's growth strategy is the opening of new stores.
The Company's ability to continue opening new stores will depend, among other
things, upon its ability to hire management and personnel to staff the new
stores, and to find suitable sites at reasonable rental rates to locate new
stores. From time to time the Company also expects to pursue opportunistic
acquisitions of sales & lease ownership and rent-to-rent operations. There can
be no assurance that future acquisitions will be consummated on acceptable terms
or that any acquired companies will be successfully integrated. While the
Company believes that the market for its stores is underserved and offers
attractive expansion opportunities, it does not know if consumer preferences
will remain unchanged, or the extent to which its competitors may seek to serve
the market.
Significant Competition
The Company's businesses are highly competitive. The Company competes in the
rent-to-rent market with national and local companies and, to a lesser extent,
with apartment owners who purchase furniture for rental to tenants. In the sales
& lease ownership market, the Company's competitors include national, regional
and local operators of rent-to-own stores and credit retailers. Some of
9
11
these competitors may have significantly greater financial and operating
resources, and in certain markets, greater name recognition, than the Company.
Risks Associated with Significant Government Regulation
The Company believes that 46 states specifically regulate rent-to-own and sales
& lease ownership transactions, including states in which the Company currently
operates Aaron's Sales & Lease Ownership stores. Most of these states have
enacted disclosure laws which require rent-to-own companies to disclose to their
customers the total number of payments, total amount and timing of all payments
to acquire ownership of any item, any other charges that may be imposed by the
Company and miscellaneous other items. The most restrictive states limit the
total amount that a customer may be charged for an item to twice the "retail"
price for the item, or regulate the amount of "interest" that rent-to-own
companies may charge on rent-to-own transactions, generally defining "interest"
as rental fees paid in excess of the "retail" price of the goods. The Company's
long-established policy in all states is to fully disclose the terms of its
sales & lease ownership transactions as a matter of good business ethics and
customer service. At the present time, no federal law specifically regulates the
rent-to-own industry.
Federal legislation has been proposed from time to time to regulate the
industry. Management cannot predict whether any such legislation will be enacted
and what the impact of such legislation would be. Although the Company is unable
to predict the results of these or any additional regulatory initiatives, the
Company does not believe that the existing and previously proposed regulations
would have a material adverse impact on the Company's sales & lease ownership or
other operations.
The Company's Aaron's Sales & Lease Ownership franchise program is subject to
Federal Trade Commission ("FTC") regulation and various state laws regulating
the offer and sale of franchises. Several state laws also regulate substantive
aspects of the franchisor-franchisee relationship. The FTC requires the Company
to furnish to prospective franchisees a franchise offering circular containing
prescribed information. A number of states in which the Company might consider
franchising also regulate the sale of franchises and require registration of the
franchise offering circular with state authorities. The Company believes it is
in material compliance with all applicable franchise laws.
Control by and Dependence Upon Principal Shareholder
R. Charles Loudermilk, Sr., the Company's Chief Executive Officer and Chairman
of the Board, owns or controls over 60% of the Company's voting Class A Common
Stock and approximately 14% of the non-voting Common Stock outstanding. As a
result, Mr. Loudermilk will continue to be able to elect all the directors of,
and otherwise effectively control, the Company. The Company believes that it has
benefited substantially from Mr. Loudermilk's leadership and that if it were to
lose his services at anytime in the near future such loss could have an adverse
effect on the Company's business and operations.
ITEM 2. PROPERTIES
The Company leases space for substantially all of its store and warehouse
operations under operating leases expiring at various times through September
30, 2013. Most of the leases contain renewal options for additional periods
ranging from one to fifteen years at rental rates generally adjusted on the
basis of the consumer price index or other factors.
The following table sets forth certain information regarding the Company's
furniture manufacturing plants, bedding facilities, lamp manufacturing facility
and distribution centers:
LOCATION PRIMARY USE SQUARE FT.
- -------- ----------- ----------
Cairo, Georgia ................................ Furniture Manufacturing 192,000
Coolidge, Georgia ............................. Furniture Manufacturing 77,000
Coolidge, Georgia ............................. Furniture Manufacturing 43,000
Coolidge, Georgia ............................. Furniture Manufacturing 41,000
Quincy, Florida ............................... Furniture Manufacturing 80,000
Sugarland, Texas .............................. Furniture Manufacturing 153,000
Sun Valley, California ........................ Lamp and Accessory
Manufacturing 52,000
Cairo, Georgia ................................ Bedding Facility 8,000
Buford, Georgia ............................... Bedding Facility 32,000
Houston, Texas ................................ Bedding Facility 13,000
Orlando, Florida .............................. Bedding Facility 16,000
Auburndale, Florida ........................... Sales & Lease Ownership
Distribution Center 85,000
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Baltimore, Maryland............................ Sales & Lease Ownership
Distribution Center 99,000
Columbus, Ohio................................. Sales & Lease Ownership
Distribution Center 99,000
Dallas, Texas.................................. Sales & Lease Ownership
Distribution Center 92,000
Duluth, Georgia................................ Sales & Lease Ownership
Distribution Center 67,000
Houston, Texas................................. Sales & Lease Ownership
Distribution Center 70,000
The Company's executive and administrative offices occupy approximately 62,000
square feet in an 11-story, 87,000 square-foot office building that the Company
owns in Atlanta. The Company leases most of the remaining space to third parties
under leases with remaining terms averaging three years. All of the Company's
facilities are well maintained and adequate for their current and reasonably
foreseeable uses.
ITEM 3. LEGAL PROCEEDINGS
The Company is not currently a party to any legal proceedings the result of
which it believes could have a material adverse impact upon its business,
financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
(a) The information presented under the caption "Common Stock Market Prices &
Dividends" on page 27 of the Company's Annual Report to Shareholders for the
year ended December 31, 2000 is incorporated herein by reference. The market
quotations stated herein reflect inter-dealer prices, without retail mark-up,
mark-down or commissions and may not necessarily represent actual transactions.
(b) As of March 22, 2001, there were 291 holders of record of the Common Stock
and 139 holders of record of the Class A Common Stock.
(c) The information presented under "Note D - Debt" on pages 20 and 21 of the
Company's Annual Report to Shareholders for the year ended December 31, 2000 is
incorporated herein by reference. During the year ended December 31, 2000, the
Company paid two semi-annual cash dividends. No assurance can be provided that
such dividends will continue.
ITEM 6. SELECTED FINANCIAL DATA
The information presented under the caption "Selected Financial Information" on
page 13 of the Company's Annual Report to Shareholders for the year ended
December 31, 2000 is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information presented under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 14 and 15 of
the Company's Annual Report to Shareholders for the year ended December 31, 2000
is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information presented under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on page 14 and 15 and
presented under "Note D - Debt" on pages 20 and 21 of the Company's Annual
Report to Shareholders for the year ended December 31, 2000 is incorporated
herein by reference.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information presented under the captions "Consolidated Balance Sheets,"
"Consolidated Statements of Earnings," "Consolidated Statements of Shareholders'
Equity," "Consolidated Statements of Cash Flows," "Notes to Consolidated
Financial Statements," and "Report of Independent Auditors" on pages 16 through
26 of the Company's Annual Report to Shareholders for the year ended December
31, 2000 is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information contained in the Company's definitive Proxy Statement, which the
Company will file with the Securities and Exchange Commission no later than 120
days after December 31, 2000, with respect to the identity, background and
Section 16 filings of directors and executive officers of the Company, is
incorporated herein by reference to this item.
ITEM 11. EXECUTIVE COMPENSATION
The information contained in the Company's definitive Proxy Statement, which the
Company will file with the Securities and Exchange Commission no later than 120
days after December 31, 2000, with respect to executive compensation, is
incorporated herein by reference in response to this item.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained in the Company's definitive Proxy Statement, which the
Company will file with the Securities and Exchange Commission no later than 120
days after December 31, 2000, with respect to the ownership of common stock by
certain beneficial owners and management, is incorporated herein by reference to
this item.
For purposes of determining the aggregate market value of the Company's voting
and non-voting common stock held by non-affiliates, shares held by all directors
and officers of the Company have been excluded. The exclusion of such shares is
not intended to, and shall not, constitute a determination as to which person or
entities may be "affiliates" of the Company as defined by the Securities and
Exchange Commission.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained in the Company's definitive Proxy Statement, which the
Company will file with the Securities and Exchange Commission no later than 120
days after December 31, 2000, with respect to certain relationships and related
transactions, is incorporated herein by reference in response to this item.
PART IV
ITEM 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(A) 1. CONSOLIDATED FINANCIAL STATEMENTS
The following financial statements and notes thereto of Aaron Rents, Inc. and
Subsidiaries, and the related Report of Independent Auditors are incorporated in
Item 8 by reference from the Company's Annual Report to Shareholders for the
year ended December 31, 2000.
12
14
REFERENCE PAGE
ANNUAL
REPORT
TO SHAREHOLDERS
Consolidated Balance Sheets - December 31, 2000 and 1999 .......................................... 16
Consolidated Statements of Earnings - Years ended December 31, 2000, 1999 and 1998 ................ 17
Consolidated Statements of Shareholders' Equity - Years ended December 31, 2000, 1999 and 1998..... 17
Consolidated Statements of Cash Flows - Years ended December 31, 2000, 1999 and 1998 .............. 18
Notes to Consolidated Financial Statements ........................................................ 19-26
Report of Independent Auditors .................................................................... 26
2. CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
All schedules have been omitted because they are inapplicable or the
required information is included in the financial statements or notes thereto.
3. EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
3(a) Amended and Restated Articles of Incorporation of the Company, filed as Exhibit 3 to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 (the "March
31, 1996 10-Q"), which exhibit is by this reference incorporated herein.
3(b) Amended and Restated By-laws of the Company, filed as Exhibit 3(b) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1997, which exhibit is by this
reference incorporated herein.
4 See Exhibits 3 (a) through 3 (b).
10(a) Aaron Rents, Inc. 1996 Stock Option and Incentive Award Plan, filed as Exhibit 4(a) to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998 (the "March
31, 1998 10-Q"), which exhibit is incorporated by this reference.*
10(b) Aaron Rents, Inc. Employees Retirement Plan and Trust, filed as Exhibit 4(a) to the
Company's Registration Statement on Form S-8, file number 33-62538, filed with the
Commission on May 12, 1993, which exhibit is by this reference incorporated herein.*
10(c) Aaron Rents, Inc. 1990 Stock Option Plan, filed as Exhibit 4(a) to the Company's
Registration Statement on Form S-8, file number 33-62536, filed with the Commission on May
12, 1993, which exhibit is by this reference incorporated herein.*
10(d) Second Amended and Restated Revolving Credit and Term Loan Agreement, dated January 6,
1995, filed as Exhibit 10(a) to the Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1994 (the "December 31, 1994 10-Q"), which exhibit is by this
reference incorporated herein.
10(e) Third Amendment to Second Amended and Restated Revolving Credit and Term Loan Agreement,
dated September 30, 1996, filed as Exhibit 10 to the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1996, which exhibit is by reference incorporated
herein.
10(f) Fifth Amendment to Second Amended and Restated Revolving Credit and Term Loan Agreement,
dated December 17, 1997, filed as Exhibit 10(a) to the Company's Annual Report on Form
10-K for the year ended December 31, 1997 (the "1997 10-K"), which exhibit is incorporated
by this reference.
10(g) Letter Agreements dated December 30, 1997 between SunTrust Bank, Atlanta and the Company,
and letter agreements dated December 30, 1997 between First Chicago NBD and the Company
regarding Interest Rate Swap
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Transactions, filed as Exhibit 10(b) to the Company's 1997 10-K, which exhibit is
incorporated by this reference.
10(h) Loan Facility Agreement and Guaranty by and among Aaron Rents, Inc., SunTrust Bank,
Atlanta, as Servicer and each of the Participants Party Hereto, Dated January 20, 1998,
filed as Exhibit 10(a) to the Company's March 31, 1998 10-Q, which exhibit is incorporated
by this reference.
10(i) Amendment No. 1 to Loan Facility Agreement and Guaranty dated as of March 13, 1998, filed
as Exhibit 10(b) to the Company's March 31, 1998 10-Q, which exhibit is incorporated by
this reference.
10(j) Amended and Restated Loan Facility Agreement and Guaranty and related Servicing Agreement
dated as of November 3, 1999, filed as Exhibit 10(j) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1999 (the "1999" 10-K"), which exhibit is
incorporated by this reference.
10(k) Amended and Restated Loan Facility Agreement and Guaranty dated as of June 20, 2000, filed
as part of this Annual Report on Form 10-K.
10(l) Loan Facility Agreement and Guaranty by and among Aaron Rents, Inc. and Southtrust Bank
dated August 31, 2000, filed as part of this Annual Report on Form 10-K.
10(m) Loan Agreement between Fort Ben County Industrial Development Corporation and Aaron Rents,
Inc. relating to the Industrial Development Revenue Bonds (Aaron Rents, Inc. Project),
Series 2000 dated October 1, 2000, filed as part of this Annual Report on Form 10-K.
10(n) Letter of Credit and Reimbursement Agreement between Aaron Rents, Inc. and First Union
National Bank dated as of October 1, 2000, filed as part of this Annual Report on Form
10-K.
10(o) Term Loan Agreement among Aaron Rents, Inc. Puerto Rico as borrower, Aaron Rents, Inc. as
Guarantor and SunTrust Bank as Administrative Agent dated November 21, 2000, filed as part
of this Annual Report on Form 10-K.
13 Portions of the Aaron Rents, Inc. Annual Report to Shareholders for the year ended
December 31, 2000. With the exception of information expressly incorporated herein by
direct reference thereto, the Annual Report to Shareholders for the year ended December
31, 2000 is not deemed to be filed as part of this Annual Report on Form 10-K.
21 Subsidiaries of the Registrant, filed as part of this Annual Report on Form 10-K.
23 Consent of Ernst & Young LLP
- ------------------
* Management contract or compensatory plan or arrangement required to be filed
as an exhibit pursuant to item 14 (c) of this report.
(b) Reports on Form 8-K - none
(c) Exhibits listed in item 14 (a) (3) are included elsewhere in this Report.
14
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 30th day of
March, 2001.
AARON RENTS, INC.
By: /s/ GILBERT L. DANIELSON
--------------------------
Gilbert L. Danielson
Executive Vice President
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities indicated on the 30th day of March, 2001.
SIGNATURE TITLE
--------- -----
/s/ R. CHARLES LOUDERMILK, SR. Chief Executive Officer (Principal Executive
- ----------------------------------------- Officer) and Chairman of the Board of
R. Charles Loudermilk, Sr. Directors)
/s/ ROBERT C. LOUDERMILK, JR. President, Chief Operating Officer and
- ----------------------------------------- Director
Robert C. Loudermilk, Jr.
/s/ GILBERT L. DANIELSON Executive Vice President, Chief Financial
- ----------------------------------------- Officer and Director, (Principal
Gilbert L. Danielson Financial Officer)
/s/ ROBERT P. SINCLAIR, JR. Vice President, Corporate Controller,
- ----------------------------------------- (Principal Accounting Officer)
Robert P. Sinclair, Jr.
/s/ WILLIAM K. BUTLER President, Aaron Sales & Lease Ownership
- ----------------------------------------- Division, and Director
William K. Butler
/s/ RONALD W. ALLEN Director
- -----------------------------------------
Ronald W. Allen
/s/ LEO BENATAR Director
- -----------------------------------------
Leo Benatar
/s/ EARL DOLIVE Director
- -----------------------------------------
Earl Dolive
/s/ J.REX FUQUA Director
- -----------------------------------------
J. Rex Fuqua
/s/ INGRID SAUNDERS JONES Director
- -----------------------------------------
Ingrid Saunders Jones
/s/ LTG. M. COLLIER ROSS USA (RET.) Director
- -----------------------------------------
LTG M. Collier Ross USA (Ret.)
15