==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
---------------
Date of Report (Date of earliest event reported):
January 2, 1997
ALRENCO, INC.
(Exact name of registrant as specified in its charter)
Indiana 0-27490 35-1480655
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
1736 E. Main Street, New Albany, Indiana 47150
(Address of principal executive offices) (Zip Code)
(812) 949-3370
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
==============================================================================
<PAGE>
Item 7. Financial Statements and Exhibits.
---------------------------------
(a) Financial Statements.
--------------------
On January 2, 1997, pursuant to an Asset Purchase Agreement
of the same date, Alrenco, Inc. acquired substantially all of the
assets of Fastway, Inc., an Arkansas corporation ("Fastway").
The following financial statements of Fastway are filed as a part
of this report:
Report of Independent Certified Public Accountants
Balance Sheet as of August 31, 1996
Statement of Operations for the year ended August 31, 1996
Statements of Changes in Stockholders' Equity for the year ended
August 31, 1996
Statement of Cash Flows for the year ended August 31, 1996
Notes to Financial Statements
Balance Sheet as of December 31, 1996 (unaudited)
Statements of Operations for the four months ended December 31,
1996 and 1995 (unaudited)
Statements of Changes in Stockholders' Equity for the four months
ended December 31, 1996 (unaudited)
Statement of Cash Flows for the four months ended December 31,
1996 and 1995 (unaudited)
Note to Financial Statements (unaudited)
(b) Pro Forma Financial Information.
-------------------------------
The following unaudited pro forma financial statements
relating to the acquisition of Fastway are filed as a part of
this report:
Pro Forma Condensed Balance Sheets as of September 30, 1996
Pro Forma Condensed Statements of Earnings for the year ended
December 31, 1995 and the nine months ended September 30,
1996
<PAGE>
Signatures
----------
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Dated: March 14, 1997
ALRENCO, INC.
By: /s/ Theodore H. Wilson
--------------------------------
Theodore H. Wilson
Executive Vice President and
Chief Financial Officer
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
Board of Directors and Stockholders
Fastway, Inc.
We have audited the accompanying balance sheet of Fastway, Inc.
(the "Company") as of August 31, 1996, and the related statements
of operations, changes in stockholders' equity and cash flows for
the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Fastway, Inc. as of August 31, 1996, and the results of its
operations and cash flows for the year then ended in conformity
with generally accepted accounting principles.
TRAVIS, WOLFF & COMPANY, L.L.P.
November 8, 1996
Dallas, Texas
<PAGE>
FASTWAY, INC.
Balance Sheet
August 31, 1996
Assets
------
<TABLE>
Assets:
<S> <C>
Cash $ 213,697
Accounts receivable - officers
and employees (Note 2) 143,625
Income tax carryback claim receivable 186,000
Prepaid expenses, primarily insurance 173,555
Rental merchandise, net (Note 3) 3,547,585
Property assets, net (Note 4) 637,458
Deferred tax assets (Note 11) 171,000
Deposits and other 26,330
---------
$5,099,250
=========
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Accounts payable $ 301,430
Accrued liabilities 323,684
Taxes payable, primarily payroll 29,075
Revolving line of credit (Note 5) 2,577,334
Notes payable, primarily to a
stockholder (Note 9) 137,935
---------
3,369,458
---------
Stockholders' equity:
Common stock (Note 6) 100
Paid-in capital 900
Retained earnings 1,728,792
---------
1,729,792
---------
$5,099,250
=========
</TABLE>
The accompanying notes are an integral part of the financial
statements.
- 2 -
<PAGE>
FASTWAY, INC.
Statement of Operations
For the Year Ended August 31, 1996
<TABLE>
Revenue:
<S> <C>
Rentals $10,434,093
Merchandise sales 380,102
Fees and other 1,571,850
----------
12,386,045
----------
Direct store expenses:
Depreciation of rental merchandise 2,937,050
Cost of merchandise sold 1,098,981
Salaries and other 7,689,397
----------
11,725,428
General and administrative 882,258
Depreciation and amortization of property assets 350,942
Interest, net 320,538
----------
13,279,166
----------
Operating (loss) (893,121)
Other income:
Gain on sale of stores (Note 10) 259,223
Purchase rebates 55,181
Gain on sale of fixed assets 107,338
----------
421,742
----------
(Loss) before income tax benefit (471,379)
Income tax benefit (Note 11) (130,193)
----------
Net (loss) $ (341,186)
==========
</TABLE>
The accompanying notes are an integral part of the financial
statements.
- 3 -
<PAGE>
FASTWAY, INC.
Statements of Changes in Stockholders' Equity
For the Year Ended August 31, 1996
<TABLE>
<CAPTION>
Additional Total
Common Paid-In Retained Stockholders'
Stock Capital Earnings Equity
--------- ---------- -------- ------------
<S> <C> <C> <C> <C>
Balance at August 31,
1995, as previously
reported $ 100 $ 900 $2,179,876 $2,180,876
Adjustment for
uncollectible
rentals (Note 1) - - (109,898) (109,898)
--------- --------- --------- ---------
Balance, as adjusted,
at August 31, 1995 100 900 2,069,978 2,070,978
Net (loss) - - (341,186) (341,186)
--------- --------- --------- ---------
Balance at August 31,
1996 $ 100 $ 900 $1,728,792 $1,729,792
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
- 4 -
<PAGE>
FASTWAY, INC.
Statement of Cash Flows
For the Year Ended August 31, 1996
<TABLE>
<S> <C>
Cash flows from operating activities:
Cash and fees received for rentals $12,386,045
Cash paid to suppliers and employees (8,628,219)
Cash paid for rental merchandise (3,238,814)
Interest received 1,393
Interest paid (321,931)
----------
Net cash flows provided by operating activities 198,474
----------
Cash flows from investing activities:
Proceeds from sales of stores (Note 10) 1,650,000
Purchase of property assets (206,646)
Proceeds from sales of property assets 129,198
----------
Net cash provided by investing activities 1,572,552
----------
Cash flows from financing activities:
Reduction on line of credit (5,795,088)
Proceeds from borrowings on line of credit 3,672,422
Proceeds from purchase rebates 55,181
Proceeds from note to stockholder 324,018
Repayment of debt to stockholder (80,125)
Loan to non-stockholder officer (132,500)
----------
Net cash (used) by financing activities (1,956,092)
----------
Net (decrease) in cash (185,066)
Cash - beginning of year 398,763
----------
Cash - end of year $ 213,697
==========
</TABLE>
(Continued)
- 5 -
<PAGE>
FASTWAY, INC.
Statement of Cash Flows
For the Year Ended August 31, 1996
Reconciliation of Net (Loss) to Net Cash Provided
by Operating Activities
<TABLE>
<S> <C>
Net (loss) $ (341,186)
Reconciling items:
Depreciation and amortization 350,942
(Increase) decrease in assets -
Accounts receivable (16,795)
Collections receivable (Note 1) 166,898
Income taxes receivable 28,046
Prepaids 126,760
Other 66,437
(Decrease) increase in liabilities -
Accounts payable (73,240)
Accrued expenses 15,261
Income taxes payable (124,649)
---------
Net cash provided by operating activities $ 198,474
=========
</TABLE>
The accompanying notes are an integral part of the financial
statements.
-6-
<PAGE>
FASTWAY, INC.
Notes to Financial Statements
August 31, 1996
Note 1 - Summary of Significant Accounting Policies
- ---------------------------------------------------
Business
- --------
Fastway, Inc. (the "Company") leases household durable goods to
customers on a rent-to-own basis. As of August 31, 1996, the
Company operated 28 stores in 26 cities in the states of
Arkansas, Mississippi, Missouri and Texas.
Property assets
- ---------------
Property assets are stated at cost. Depreciation of office
furniture and equipment, computers, and vehicles is provided over
the estimated useful lives of the respective assets (five and
seven years) using declining balance methods. Leasehold
improvements are amortized over the term of the applicable leases
on the straight-line basis.
Cash and cash equivalents
- -------------------------
For purposes of reporting cash flows, cash and cash equivalents
include cash on hand, amounts due from banks, and all highly
liquid debt instruments purchased with a maturity of three months
or less. At August 31, 1996, there were no cash equivalents.
Use of estimates
- ----------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could
differ from those estimates.
Adjustment for uncollectible rentals
- ------------------------------------
At August 31, 1995, the Company had $166,898 of uncollectible
rental contracts, included in rental merchandise, that had not
been written off. During the year ended August 31, 1996, these
contracts were written off, net of $57,000 of related income tax
benefit, and reflected as an adjustment to retained earnings at
August 31, 1995 in the accompanying statement of stockholders'
equity.
- 7 -
<PAGE>
FASTWAY, INC.
Notes to Financial Statements
August 31, 1996
Note 2 - Accounts Receivable - Officers and Employees
- -----------------------------------------------------
On August 31, 1996, the Company had a receivable from one of its
officers in the amount of $132,500. In addition, receivables
from employees were $11,125 on August 31, 1996, and represented
amounts owed for rental assets purchased.
Note 3 - Rental Merchandise, Related Rental Income and
- ------------------------------------------------------
Amortization
- ------------
Rental merchandise is rented to customers pursuant to rental
agreements which provide for weekly or monthly rental terms with
rental payments collected in advance. Title to the merchandise
passes to the customer upon the collection of a specified number
of rental payments. The rental agreements may be terminated at
any time by the customers, and if terminated, the rental
merchandise is returned to the Company. Rental income is
recognized as collected, since at the time of collection the
rental merchandise has been placed in service, costs of
installation and delivery have been incurred and generally there
is no obligation to refund the rental income collected. A
customer may purchase the rental merchandise at any time at the
current fair market value of the merchandise.
Rental merchandise is stated at cost, less depreciation
calculated by using the income forecasting method. The income
forecasting method amortizes rental merchandise based on the
income generated by the merchandise. Rental merchandise is
pledged as security for the revolving line of credit referred to
in Note 5.
Original cost and accumulated depreciation of rental merchandise
at August 31, 1996, is as follows:
<TABLE>
<S> <C>
Original cost of merchandise $6,251,597
Accumulated depreciation 2,704,012
---------
$3,547,585
=========
</TABLE>
- 8 -
<PAGE>
FASTWAY, INC.
Notes to Financial Statements
August 31, 1996
Note 4 - Property Assets
- ------------------------
Property assets are pledged as security for the revolving line of
credit referred to in Note 5. Property assets consisted of the
following at August 31, 1996:
<TABLE>
<S> <C>
Office furniture and equipment $ 552,901
Computer equipment 252,879
Vehicles 99,336
Leasehold improvements 829,439
---------
1,734,555
Accumulated depreciation 1,097,097
---------
$ 637,458
=========
Total depreciation for the year $ 344,542
=========
</TABLE>
Note 5 - Revolving Line of Credit
- ---------------------------------
The revolving line of credit is with a bank. Under the line of
credit, the Company can borrow an amount based upon the sum not
in excess of 100% of the value of the eligible cash receipts of
the Company for the average of the most recent three calendar
months up to the sum of $2,800,000. (See Note 12.) At August
31, 1996, the borrowing base under the line of credit was
$2,577,334. The amount outstanding bears interest at the bank's
prime rate plus 2% (10.5% at August 31, 1996) and is secured by
inventories, rental contracts, common stock and a $500,000 life
insurance policy on a stockholder. The revolving credit
agreement includes certain restrictive covenants as to financial
reporting, stockholders' compensation, ratio of debt to net worth
and length of rental contracts. The loan matures on February 1,
1997. As of November 8, 1996, the outstanding balance of the
revolving line of credit was $2,578,085.
Note 6 - Common Stock
- ---------------------
At August 31, 1996, there were 10,000 shares of $10 par value
common stock authorized, with ten shares issued and outstanding.
- 9 -
<PAGE>
FASTWAY, INC.
Notes to Financial Statements
August 31, 1996
Note 7 - Economic Dependency - Major Suppliers
- ----------------------------------------------
During the year ended August 31, 1996, the Company purchased
rental merchandise from suppliers exceeding $3,138,000.
Purchases from one major supplier aggregated $599,000 or 19% of
such purchases.
Note 8 - Operating Leases
- -------------------------
The Company leases space for all of its store locations. The
Company also leases vehicles, generally over three year
cancelable agreements. All leases are accounted for as operating
leases. Rental expense of $965,103 for the year ended August 31,
1996, is included in Salaries and other direct store expenses.
Future minimum rental payments under operating leases with
remaining noncancelable lease terms in excess of one year at
August 31, 1996, are as follows:
<TABLE>
Years ending
August 31:
------------
<S> <C>
1997 $ 722,072
1998 532,941
1999 392,879
2000 200,112
2001 42,379
Thereafter 0
---------
$1,890,383
=========
</TABLE>
Note 9 - Related Party Transactions
- -----------------------------------
The Company leases eleven store locations from a stockholder.
Total lease expense under these leases was $294,067 for the year
ended August 31, 1996.
As of August 31, 1996, there was a note payable to a stockholder
in the amount of $135,678.
- 10 -
<PAGE>
FASTWAY, INC.
Notes to Financial Statements
August 31, 1996
Note 10 - Sale of Stores
- ------------------------
The Company sold nine of its stores during the year in two
separate sales. The following is an analysis of the two sales:
<TABLE>
<CAPTION>
SALE OF SALE OF
SIX THREE SALE
LOCATIONS LOCATIONS TOTALS
--------- --------- ------
<S> <C> <C> <C>
Sales price $1,125,000 $ 525,000 $1,650,000
Rental merchandise
sold, net (747,933) (421,442) (1,169,375)
Property assets
sold, net (169,193) (52,209) (221,402)
--------- --------- ---------
Gain on sale $ 207,874 $ 51,349 $ 259,223
========= ========= =========
</TABLE>
Note 11 - Income Taxes
- ----------------------
Deferred tax assets represent a reduction in the amount of taxes
payable in future years (based on current tax laws) resulting
from future net deductible amounts arising from temporary
differences in the reporting of certain expense items for
financial statement and for income tax purposes, primarily the
depreciation of leasehold improvements. The provision for
deferred income tax expense or benefit represents the net change
during the year in the Company's deferred tax assets.
The following is an analysis of income tax benefit for the year
ended August 31, 1996:
<TABLE>
<CAPTION>
Currently
Refundable Deferred Benefit
---------- -------- -------
<S> <C> <C> <C>
Federal $ 129,000 $ 1,193 $ 130,193
</TABLE>
-11-
<PAGE>
FASTWAY, INC.
Notes to Financial Statements
August 31, 1996
Note 11 - Income Taxes (Continued)
- ----------------------
The following is an analysis of deferred income taxes on future
deductible differences as of August 31, 1996:
<TABLE>
<S> <C>
Property assets, primarily leasehold
improvements $ 159,000
Net operating loss carryforward
(Arkansas) 48,400
Valuation allowance for Arkansas
net operating loss carryforward (36,400)
---------
$ 171,000
=========
</TABLE>
The following is a reconciliation between financial statement net
(loss) and estimated taxable (loss) for the year ended August 31,
1996:
<TABLE>
<S> <C>
Financial statement net (loss)
before taxes $ (471,379)
Add adjustment for uncollectible
rentals (Note 1) (166,898)
---------
(Loss) before taxes, as adjusted (638,277)
Adjustments for:
Depreciation of property assets 92,900
Accrued salaries (49,600)
Officer life insurance premiums 33,400
Other differences 14,800
---------
Estimated taxable (loss) before
income tax benefit $ (546,777)
=========
</TABLE>
Note 12 - Subsequent Event
- --------------------------
On November 8, 1996, the borrowing base on the revolving line of
credit from a bank was increased from $2,800,000 to $3,200,000.
-12-
<PAGE>
FASTWAY, INC.
BALANCE SHEET
December 31, 1996
(unaudited)
ASSETS
<TABLE>
<S> <C>
Assets
Cash $ 172,118
Accounts receivable - officers and employees 149,788
Income tax carryback claim receivable 187,939
Prepaid expenses, primarily insurance 124,613
Rental merchandise, net 4,153,754
Property assets, net 522,331
Deferred tax assets 169,807
Deposits and other 28,060
---------
$5,508,410
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable $ 272,346
Accrued liabilities 175,530
Taxes payable, primarily payroll 28,591
Revolving line of credit 3,170,303
Notes payable, primarily to stockholder 137,174
---------
3,783,944
Stockholders' equity
Common stock 100
Paid-in capital 900
Retained earnings 1,723,466
---------
1,724,466
---------
$5,508,410
=========
</TABLE>
The accompanying note is an integral part of these statements.
<PAGE>
FASTWAY, INC.
STATEMENT OF OPERATIONS
For the four months ended December 31,
(unaudited)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Revenue
Rental $3,446,564 $3,597,591
Merchandise sales 49,893 35,632
Fees and other 473,102 579,331
--------- ---------
3,969,559 4,212,554
Direct store expenses
Depreciation of rental merchandise 900,090 992,843
Cost of merchandise sold 53,167 50,937
Salaries and other 2,647,451 3,328,178
--------- ---------
3,600,708 4,371,958
General and administrative 210,600 338,034
Depreciation and amortization of
property assets 83,023 137,918
Interest 96,640 121,938
--------- ---------
3,990,971 4,969,848
--------- ---------
Operating loss (21,412) (757,294)
Other
Gain on sale of stores - 485,456
Gain (loss) on sale of fixed assets 18,377 (156,027)
--------- ---------
18,377 329,429
--------- ---------
Loss before income tax benefit (3,035) (427,865)
Income tax expense (benefit) 2,291 (136,824)
--------- ---------
NET LOSS $ (5,326) $ (291,041)
========= =========
</TABLE>
The accompanying note is an integral part of these statements.
<PAGE>
FASTWAY, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the four months ended December 31, 1996
(unaudited)
<TABLE>
<CAPTION>
Additional Total
Common Paid-In Retained Stockholders'
Stock Capital Earnings Equity
--------- ---------- -------- ------------
<S> <C> <C> <C> <C>
Balance at September 1,
1996 $100 $900 $1,728,792 $1,729,792
Net loss - - (5,326) (5,326)
--- --- --------- ---------
Balance at December 31,
1996 $100 $900 $1,723,466 $1,724,466
=== === ========= =========
</TABLE>
The accompanying note is an integral part of these statements.
<PAGE>
FASTWAY, INC.
STATEMENT OF CASH FLOWS
For the four months ended December 31,
(unaudited)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (5,326) $ (29,041)
Depreciation and amortization 983,113 1,130,761
Deferred tax expense 1,193 -
Gain on sale of assets (18,377) (329,429)
Changes in operating assets
and liabilities
Accounts receivable (6,163) 133,585
Income taxes receivable (1,939) 199,246
Prepaid expenses 48,942 (73,778)
Rental merchandise (1,506,259) (575,922)
Other assets (1,730) (6,294)
Accounts payable (29,084) 94,021
Accrued liabilities (148,154) (80,271)
Taxes payable (484) (105,306)
--------- ---------
Net cash provided by (used in)
operating activities (684,268) 95,572
Cash flows from investing activities
Proceeds from sale of property assets 50,481 1,650,000
--------- ---------
Net cash provided by
investing activities 50,481 1,650,000
Cash flows from financing activities
Net change in line of credit 592,208 (1,874,999)
--------- ----------
Net cash provided by
financing activities 592,208 (1,874,999)
--------- ----------
Net decease in cash (41,579) (129,427)
Cash at the beginning of the period 213,697 398,763
--------- ----------
Cash at the end of the period $ 172,118 $ 269,336
========= ==========
Supplemental disclosure of
cash flow information
Cash paid for interest $ 95,400 $ 119,300
Cash paid for taxes $ - $ -
</TABLE>
The accompanying note is an integral part of these statements.
<PAGE>
FASTWAY, INC.
NOTE TO FINANCIAL STATEMENTS
1. The interim financial statements of Fastway, Inc. (the
Company) included herein have been prepared by the Company
pursuant to the rules and regulations of the Securities and
Exchange commission. Certain information and footnote
disclosure normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes that
the disclosures are adequate to make the information
presented not misleading. It is suggested that these
financial statements be read in conjunction with the
financial statements and notes included in the preceding
financial statements for the year ended August 31, 1996. In
the opinion of management, the accompanying unaudited
interim financial statements contain all adjustments,
consisting only of those of a normal recurring nature,
necessary to present fairly the Company's results of
operations and cash flows for the periods presented. The
results of operations for the periods presented are not
necessarily indicative of the results to be expected for the
full year.
<PAGE>
Alrenco, Inc.
Pro Forma Condensed Financial Statements
The accompanying pro forma condensed balance sheet and pro forma
statements of earnings have been derived from the Company's
balance sheet at September 30, 1996 and the statements of
earnings for the year ended December 31, 1995 and the nine months
ended September 30, 1996, and the balance sheet of Fastway, Inc.
at September 30, 1996 and the statements of operations for the
year ended December 31, 1995 and the nine months ended September
30, 1996. These statements give effect the acquisition of Fastway
as though it had occurred on January 1, 1995.
The unaudited pro forma condensed statements of earnings are
presented for informational purposes only and do not purport to
be indicative of the operating results that actually would have
occurred if the acquisition had been consummated as of January 1,
1995, nor which may result from future operations. The pro forma
adjustments are based upon available information and certain
assumptions that the Company believes are reasonable. The
acquisition has been accounted for using the purchase method of
accounting. These pro forma financial statements should be read
in conjunction with the historical financial statements and
related notes of the Company included in the Form 10-K for the
year ended December 31, 1995 and Form 10-Q for the nine months
ended September 30, 1996.
<PAGE>
Alrenco, Inc.
Pro Forma Condensed Balance Sheets
September 30, 1996
(unaudited)
<TABLE>
<CAPTION>
Pro forma
adjustments
for
Company Fastway acquisition (1) Pro forma
------- ------- --------------- ---------
<S> <C> <C> <C> <C>
Assets
Cash $11,318,549 $ 172,118 $(11,490,667) $ -
Rental merchandise, net 24,947,649 3,807,617 - 28,755,266
Property assets, net 3,835,698 378,500 - 4,214,198
Intangible assets, net 18,907,957 - 7,740,959 26,648,916
Other assets 2,383,895 660,200 (660,200) 2,383,895
---------- --------- ----------- ----------
$61,393,748 $5,018,435 $ (4,409,908) $62,002,275
========== ========= =========== ==========
Liabilities
Accounts payable, trade $ 4,910,147 $ 272,354 $ (272,354) $ 4,910,147
Accrued liabilities 1,888,736 133,904 (133,904) 1,888,736
Taxes other than income 542,309 72,500 (72,500) 542,309
Debt - 3,307,477 (2,698,950) 608,527
---------- --------- ----------- ----------
7,341,192 3,786,235 (3,177,708) 7,949,719
Stockholders' equity 54,052,556 1,232,200 (1,232,200) 54,052,556
---------- --------- ----------- ----------
$61,393,748 $5,018,435 $ (4,409,908) $62,002,275
========== ========= =========== ==========
</TABLE>
(1) Gives effect to the consummation of the Fastway acquisition by the
Company. The consideration for Fastway consists of $10.75 million of
cash, which was partially financed by debt and $1.18 million escrow
payable. These adjustments allocate the purchase price to the assets of
Fastway which consist primarily of rental merchandise and property
assets.
<PAGE>
Alrenco, Inc.
Pro Forma Condensed Statements of Earnings
Year ended December 31, 1995
(unaudited)
<TABLE>
<CAPTION>
Pro forma
Company Fastway adjustments Pro forma
------- ------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues $37,575,639 $14,424,545 $ - $52,000,184
Operating expenses
Direct store expenses 30,023,179 13,459,979 - 43,483,158
General & administrative
expenses 4,338,583 1,460,523 - 5,799,106
Amortization of
intangibles 284,901 638,580(1) 923,481
---------- ---------- --------- ----------
Total operating expenses 34,646,663 14,920,502 638,580 50,205,745
---------- ---------- --------- ----------
Operating profit 2,928,976 (495,957) (638,580) 1,794,439
Other (income) expense
Interest expense 894,003 343,984 356,683(2) 1,594,670
Other (99,930) (134,232) - (234,162)
---------- ---------- --------- ----------
Earnings (loss) before
income taxes 2,134,903 (705,709) (995,263) 433,931
Income tax expense
(benefit) 868,311 (238,327) (453,495)(3) 176,489
---------- ---------- --------- ----------
Net earnings (loss) $ 1,266,592 $ (467,382) $ (541,768) $ 257,442
========== ========== ========== ==========
Earnings per share $ 0.41 -0.15 -0.17 0.08
========== ========== ========== ==========
Weighted average common
shares outstanding 3,105,000 3,105,000 3,105,000 3,105,000
========= ========= ========= =========
</TABLE>
(1) Amortization of amounts assigned to customer rental agreements over 15
months, noncompete agreement over five years, and goodwill over 20 years.
(2) Adjustment to interest expense for debt of the Company incurred in
connection with the acquisition.
(3) Tax effects of the loss of Fastway and the pro forma adjustments.
<PAGE>
Alrenco, Inc.
Pro Forma Condensed Statements of Earnings
Nine months ended September 30, 1996
(unaudited)
<TABLE>
<CAPTION>
Pro forma
Company Fastway adjustments Pro forma
------- ------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues $44,171,577 $9,249,753 $ - $53,421,330
Operating expenses
Direct store expenses 34,382,488 8,716,664 - 43,099,152
General & administrative
expenses 3,903,214 895,539 - 4,798,753
Amortization of
intangibles 613,341 - 478,935(1) 1,092,276
---------- --------- --------- ----------
Total operating
expenses 38,899,043 9,612,203 478,935 48,990,181
---------- --------- --------- ----------
Operating profit 5,272,534 (362,450) (478,935) 4,431,149
Other (income) expense
Interest expense 609,086 237,970 267,512(2) 1,114,568
Other - (285,873) - (285,873)
---------- --------- --------- ----------
Earnings (loss) before
income taxes 4,663,448 (314,547) (746,447) 3,602,454
Income tax expense (benefit) 1,913,774 (86,222) (349,186)(3) 1,478,366
---------- --------- --------- ----------
Net earnings (loss) $ 2,749,674 $ (228,325) $ (397,261) $ 2,124,088
========== ========= ========= ==========
Earnings per share $ 0.63 -0.05 -0.09 0.49
========== ========= ========= ==========
Weighted average common
shares outstanding 4,365,814 4,365,814 4,365,814 4,365,814
========== ========= ========= ==========
</TABLE>
(1) Amortization of amounts assigned to customer rental agreements over 15
months, noncompete agreement over five years, and goodwill over 20 years.
(2) Adjustment to interest expense for debt of the Company incurred in
connection with the acquisition.
(3) Tax effects of the loss of Fastway and the pro forma adjustments.
