<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 13, 1998
REGISTRATION NO. 333-47521
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
AMENDMENT NO. 1
TO
Form S-4
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
------------------------------------
ALRENCO, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
INDIANA 7359 35-1480655
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
</TABLE>
714 E. KIMBROUGH STREET
MESQUITE, TEXAS 75149
(972) 288-9327
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------------
BILLY W. WHITE, SR.
CHIEF EXECUTIVE OFFICER
ALRENCO, INC.
714 E. KIMBROUGH STREET
MESQUITE, TEXAS 75149
(972) 288-9327
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------------
COPIES TO:
JOHN D. CAPERS, JR.
KING & SPALDING
191 PEACHTREE STREET
ATLANTA, GEORGIA 30303
(404) 572-4600
------------------------------------
Approximate date of commencement of proposed sale to the public: From time
to time following the effectiveness of this Registration Statement.
If any securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
------------------------.
If this form is a post-effective amendment filed pursuant to Rule 462(b)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
------------------------.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective as of such date as the Commission, acting pursuant to said Section
8(a), may determine.
================================================================================
<PAGE> 2
------------------------
PROSPECTUS
5,000,000 SHARES
ALRENCO, INC.
COMMON STOCK
------------------------
This prospectus (the "Prospectus") relates to the issuance of 5,000,000
shares of common stock, no par value ("Common Stock"), of Alrenco, Inc., an
Indiana corporation ("Alrenco" or the "Company"), which may be offered by the
Company from time to time in connection with acquisitions of other businesses,
assets or properties ("Acquisitions"). The consideration for such Acquisitions
will consist of shares of Common Stock, cash, notes or other evidences of
indebtedness, guarantees, assumptions of liabilities or a combination thereof,
as determined from time to time by negotiations between the Company and the
owners, controlling persons or management of the businesses, assets or
properties to be acquired. In addition, the Company may lease property from and
enter into employment or consulting agreements and noncompetition agreements
with the former owners and key employees of the businesses to be acquired.
The terms of an Acquisition will be determined through arms' length
negotiations between the Company and the owners, controlling person or
management of the businesses, assets or properties to be acquired. Factors to be
taken into account in the Acquisitions include, but are not limited to, the
quality and reputation of the business, its management, earning power, cash
flow, growth potential, markets and markets under development, licenses,
locations of the business to be acquired and the market value of the Common
Stock. It is anticipated that the Common Stock issued in an Acquisition will be
valued at a price reasonably related to the market value of shares of Common
Stock either at the time the terms of the Acquisition are tentatively agreed
upon or at about the time of the closing of such Acquisition.
It is not expected that underwriting discounts or commissions will be paid
by the Company in connection with the offering or issuance of the shares of
Common Stock covered by this Prospectus.
The Common Stock is quoted on the Nasdaq National Market under the Symbol
"RNCO". On May 11, 1998, the last reported sales price per share on the Nasdaq
National Market was $17.00.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED BY PROSPECTIVE INVESTORS IN EVALUATING AN INVESTMENT IN THE SHARES
OF COMMON STOCK OFFERED HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is May , 1998.
<PAGE> 3
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission,
Washington, D.C. (the "Commission"), a Registration Statement on Form S-4
(together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Common Stock offered hereby. This Prospectus does not
contain all of the information set forth in the Registration Statement. For
further information with respect to the Company and the Common Stock, reference
is made to such Registration Statement. Statements contained in this Prospectus
regarding the contents of any contract, agreement or other document are not
necessarily complete, and in each instance reference is made to the copy of the
contract, agreement or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. The Registration Statement may be inspected at the Public Reference
Section of the Commission's principal office, Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549, and at its regional offices located at
Seven World Trade Center, Suite 1300, New York, New York 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and copies
of all or any part thereof may be obtained from the Commission upon payment of
the prescribed fees.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company with the Commission may be inspected and copied at the public reference
facilities maintained by the Commission at its principal offices at Judiciary
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the
following regional offices of the Commission: Seven World Trade Center, Suite
1300, New York, New York 10048; and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material may be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, at prescribed rates. Such material, as well
as the Registration Statement, may be accessed electronically through the
Commission's site on the World Wide Web. The Commission's Internet address is
http://www.sec.gov.
The Common Stock is listed on the Nasdaq National Market System. Reports,
proxy statements and other information about the Company can also be inspected
at the offices of the National Association of Securities Dealers, Inc. located
at 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission by the Company
are incorporated by reference into this Prospectus:
(i) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(ii) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998;
(iii) The Company's Current Report on Form 8-K filed on March 5, 1998;
(iv) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed on January 9, 1996, including any
amendment or report filed for the purpose of updating such description; and
(v) The financial statements of Action TV and Appliance Rental, Inc.
("Action") for the year ended December 31, 1995 and for the seven months
ended July 31, 1996, contained in the Company's Registration Statement on
Form S-4 (File No. 333-44451) filed on January 16, 1998.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained in this Prospectus, or in
(i)
<PAGE> 4
any other subsequently filed document which is also incorporated herein by
reference, modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed to constitute a part of this Prospectus except
as so modified or superseded.
No person is authorized to give any information or to make any
representation other than those contained in this Prospectus, and if given or
made, such information or representation should not be relied upon as having
been authorized by the Company. This Prospectus does not constitute an offer to
sell, or a solicitation of an offer to purchase, the securities offered by this
Prospectus, in any jurisdiction, to or from any person to whom or from whom it
is unlawful to make such offer, solicitation of an offer in such jurisdiction.
Neither the delivery of this Prospectus nor any distribution of securities
pursuant to this Prospectus shall, under any circumstances, create an
implication that there has been no change in the affairs of the Company or that
the information contained herein is correct as of any time subsequent to the
date of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN EXHIBITS TO SUCH
DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO
SUCH DOCUMENTS) ARE AVAILABLE WITHOUT CHARGE, UPON REQUEST FROM PATRICIA
DISBROW, ALRENCO, INC., 714 E. KIMBROUGH STREET, MESQUITE, TEXAS 75149;
TELEPHONE NUMBER (972) 882-3148. IN ORDER TO ENSURE TIMELY DELIVERY OF THESE
DOCUMENTS, ANY SUCH REQUEST SHOULD BE MADE FIVE (5) BUSINESS DAYS BEFORE FINAL
ACTION IS TO BE TAKEN WITH RESPECT TO A PROPOSED ACQUISITION INVOLVING THE
ISSUANCE OF SECURITIES COVERED BY THIS PROSPECTUS.
FORWARD-LOOKING STATEMENTS
Certain matters discussed in this Prospectus constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. The forward-looking statements relate to anticipated financial
performance, management's plans and objectives for future operations, growth
strategies, business prospects, industry trends and other matters. The Private
Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements in certain circumstances. The following discussion is
intended to identify the forward-looking statements and certain factors that
could cause future outcomes to differ materially from those set forth in the
forward-looking statements.
Forward-looking statements include the information concerning possible or
assumed future results of operations of the Company. Readers are cautioned that
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors may affect the Company's operations, markets, products, services and
prices. In addition to any assumptions and other factors referred to
specifically in connection with such forward-looking statements, factors that
could cause the Company's actual results to differ materially from those
contemplated in any forward-looking statements include, among others, the
following: general economic and business conditions; changes in the competitive
environment within the rental-purchase industry; the ability of the Company to
integrate its operations following the consummation of the merger (the "RTO
Merger") between the Company and RTO, Inc. ("RTO") in February 1998; the ability
to integrate and manage future acquired businesses; the rate of acquisitions and
new store openings; the ability to open new rental-purchase stores on a
profitable basis; the ability of the Company to implement and to obtain the
anticipated cost savings related to the RTO Merger and acquisitions of other
acquired businesses and to realize anticipated cost savings therefrom; the
actual costs required to realize synergies and cost savings from the RTO Merger
and future acquired businesses; and changes in business strategy or development
plans.
(ii)
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY..................................................... 1
The Company............................................... 1
Markets and Market Prices................................. 1
Selected Financial Data................................... 3
RISK FACTORS................................................ 4
DESCRIPTION OF ALRENCO CAPITAL STOCK........................ 7
LEGAL MATTERS............................................... 9
EXPERTS..................................................... 9
</TABLE>
(iii)
<PAGE> 6
SUMMARY
The following is a summary of certain information contained elsewhere in
this Prospectus. This summary is not intended to be a complete description of
the matters covered in this Prospectus or all material facts regarding the
Company and is subject to and qualified in its entirety by reference to the more
detailed information and financial statements contained elsewhere or
incorporated by reference in this Prospectus.
THE COMPANY
The Company operates rental-purchase stores primarily in the midwestern,
southeastern and southwestern United States. The Company's stores offer high
quality, brand-name consumer merchandise under flexible, renewable
rental-purchase agreements, also known as rent-to-own agreements. The Company's
rental-purchase agreements provide customers with the option, but not the
obligation, to obtain ownership of the merchandise following a stated number of
consecutive rental payments. The Company's customers are typically low to middle
income consumers with limited or no access to traditional credit sources such as
bank financing, installment credit and credit cards. The Company also provides
its products to consumers who desire only temporary rental of a product. The
Company's products include consumer electronics, appliances, furniture, jewelry
and home furnishing accessories.
On February 26, 1998, the Company consummated the RTO Merger pursuant to an
Agreement and Plan of Merger dated September 28, 1997, as amended (the "RTO
Merger Agreement"). Under the terms of the RTO Merger Agreement, RTO merged with
and into the Company, and the Company was the surviving corporation. At the time
of the RTO Merger, RTO operated 275 rental-purchase stores in 16 states. The RTO
Merger was accounted for as a "pooling-of-interests" transaction as set forth in
Accounting Principles Board Opinion No. 16 ("APB 16").
The Company was incorporated in 1980 under the laws of the State of
Indiana. The Company's principal executive offices are located at 714 E.
Kimbrough St., Mesquite, Texas 75149, and its telephone number is (972)
288-9327.
MARKETS AND MARKET PRICES
The Common Stock is traded on the Nasdaq National Market under the symbol
"RNCO." The following table sets forth the high and low sales prices per share
of the Common Stock for the quarterly periods indicated as reported on the
Nasdaq National Market since January 23, 1996 (the date the Company completed
its initial public offering).
<TABLE>
<CAPTION>
HIGH LOW
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<S> <C> <C>
FISCAL YEAR 1996
First Quarter (from January 23, 1996).................... $15.88 $13.75
Second Quarter........................................... 19.75 14.25
Third Quarter............................................ 23.75 16.75
Fourth Quarter........................................... 22.25 9.63
FISCAL YEAR 1997
First Quarter............................................ $12.13 $10.13
Second Quarter........................................... 13.38 10.00
Third Quarter............................................ 19.63 12.88
Fourth Quarter........................................... 19.00 13.88
FISCAL YEAR 1998
First Quarter............................................ $18.38 $14.50
Second Quarter (through May 11, 1998).................... $20.13 $14.75
</TABLE>
On May 11, 1998, the last reported sale price per share of the Common Stock
on the Nasdaq National Market was $17.00. The market price of Common Stock is
subject to fluctuation.
1
<PAGE> 7
As of May 11, 1998, there were 153 holders of record of Common Stock.
The Company has never paid any cash dividends on its Common Stock. It is
expected that the Company will retain all available earnings generated by its
operations for the development and growth of its business, and the Company does
not anticipate paying any cash dividends on the Common Stock in the foreseeable
future. Under the Company's credit facility, the Company is subject to certain
restrictions on its ability to declare or pay dividends. Any future change in
the Company's dividend policy will be made at the discretion of the Company's
Board of Directors (the "Alrenco Board") and will depend on a number of factors,
including the future earnings, capital requirements, contractual restrictions,
financial condition and future prospects of the Company and such other factors
as the Alrenco Board may deem relevant.
2
<PAGE> 8
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The table below presents selected consolidated financial information for
the Company for each of the five fiscal years in the period ended December 31,
1997, after retroactive restatement for the 1998 pooling of interests with RTO,
Inc. The selected consolidated financial data of the Company for and as of the
fiscal years ended December 31, 1994, 1995, 1996 and 1997 has been derived from
the consolidated financial statements of the Company audited by Coopers &
Lybrand L.L.P., independent accountants which give retroactive effect to the RTO
Merger. The report of Coopers & Lybrand L.L.P. makes reference to the report of
other auditors. These financial statements and Coopers & Lybrand L.L.P.'s report
thereon for each of the three years ended December 31, 1997 are incorporated
herein by reference. The selected consolidated financial data of the Company for
and as of the fiscal year ended December 31, 1993 has been derived from the
unaudited financial statements of the Company, which give retroactive effect to
the RTO Merger. The selected consolidated financial data set forth below should
be read in conjunction with the consolidated financial statements of the Company
and the notes thereto incorporated herein by reference, and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Consolidated Results of Operations of the Company" incorporated
herein by reference. The information for the year ended December 31, 1993 is
unaudited, but, in the opinion of management of the Company, includes all
adjustments (consisting only of normal recurring accruals) necessary for a fair
presentation of the financial position and results of operations for the periods
presented.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------
1993 1994 1995 1996 1997
------- ------- ------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Total revenue............................................... $61,752 $68,781 $77,529 $124,161 $230,969
Operating expenses:
Direct store expenses..................................... 48,982 56,462 65,021 104,181 195,222
Corporate expenses........................................ 6,515 7,064 7,988 10,711 26,140
Cost of business combinations............................. -- -- -- 1,743 935
Name change expense....................................... -- -- -- -- 743
Litigation settlement..................................... 625 -- -- -- --
Amortization of intangibles............................... 476 329 569 3,981 9,902
Key executive signing bonuses............................. -- -- -- 1,486 400
------- ------- ------- -------- --------
Total operating expenses................................ 56,598 63,855 73,578 122,102 233,342
------- ------- ------- -------- --------
Operating income (loss)................................. 5,154 4,926 3,951 2,059 (2,373)
Interest expense............................................ (2,206) (2,144) (2,468) (1,572) (2,512)
Interest income............................................. 25 39 35 645 218
Other non-operating income, net............................. 163 115 1,311 1,154 786
------- ------- ------- -------- --------
Income (loss) before income taxes and extraordinary
item.................................................. 3,136 2,936 2,829 2,286 (3,881)
Income tax expense.......................................... 722 764 877 1,188 237
------- ------- ------- -------- --------
Income (loss) before extraordinary item................. $ 2,414 $ 2,172 $ 1,952 $ 1,098 $ (4,118)
======= ======= ======= ======== ========
PRO FORMA INFORMATION(1)(UNAUDITED):
Income (loss) before extraordinary item................... $ 2,414 $ 2,172 $ 1,952 $ 1,098 $ (4,118)
Pro forma income tax expense (benefit) before
extraordinary item...................................... 590 505 290 201 (214)
------- ------- ------- -------- --------
Pro forma income (loss) before extraordinary item......... $ 1,824 $ 1,667 $ 1,662 $ 897 $ (3,904)
======= ======= ======= ======== ========
Pro forma income (loss) before extraordinary item per
share basic and diluted................................. .41 $ .37 $ .37 $ .09 $ (.23)
======= ======= ======= ======== ========
Pro forma weighted average number of shares outstanding
basic................................................... 4,428 4,456 4,517 10,219 16,941
diluted................................................. 4,428 4,456 4,517 10,262 17,117
======= ======= ======= ======== ========
BALANCE SHEET DATA:
Rental merchandise, net..................................... $15,636 $20,450 $21,742 $ 58,724 $ 97,261
Total assets................................................ 25,499 30,282 35,341 169,131 223,561
Total notes payable......................................... 20,308 23,152 23,064 6,772 48,162
Stockholders' equity (deficit).............................. (2,673) (534) 3,449 146,344 143,011
</TABLE>
- ---------------
(1) Proforma information presents the results of Alrenco as if the S
corporations acquired by Alrenco were fully-taxable entities for each of the
periods presented.
3
<PAGE> 9
RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Prospective investors should carefully consider the following
risk factors, in addition to other information and financial data contained
elsewhere in this Prospectus, in evaluating an investment in the shares of
Common Stock offered hereby.
Acquisition Risks. The Company has experienced significant growth in the
last two years, principally through acquisitions and, to a lesser extent, the
opening of new stores. The growth strategy of the Company is expected to be
based upon the continued acquisition of existing rental-purchase stores and an
aggressive new store opening program. The ability to continue to grow and
improve the financial performance of the Company will be significantly affected
by the Company's ability to acquire additional stores on favorable terms, to
enhance their performance and to integrate the acquired stores into the
Company's operations. The Company may compete for acquisition and expansion
opportunities with companies that have significantly greater financial and other
resources. There can be no assurance that the Company will be able to locate or
acquire suitable acquisition candidates, or that any operations that are
acquired can be effectively and profitably integrated into the Company's
existing operations. Additionally, although acquisitions will be designed to
increase the Company's long-term profitability, they may negatively impact the
Company's operating results, particularly during the periods immediately
following an acquisition. Acquired stores may also be unprofitable when acquired
or may become unprofitable during the period of acquisition due to disruptions
in their business operations caused by their acquisition. Some stores acquired
as part of an acquisition of a larger group of stores may be closed because they
are unprofitable. The operating results of acquired stores may also suffer
because of disruptions associated with integrating their operations into the
existing operations of the Company. The inability to improve the profitability
of such acquired stores could have a material adverse effect on the Company's
results of operations or financial condition. Because of the above factors, the
Company's quarterly results may vary from quarter to quarter, and the market
price of Common Stock may fluctuate substantially.
Development of New Rental-Purchase Stores. The continued growth and
financial performance of the Company will be significantly affected by the
Company's ability to open new rental-purchase stores on a profitable basis and
to integrate the new stores into the Company's operations. There can be no
assurance that the Company will be able to open new rental-purchase stores on a
profitable basis or that any new stores will be effectively and profitably
integrated into the Company's existing operations. Additionally, although new
stores will be designed to contribute to the Company's long-term profitability,
they may negatively impact the Company's operating results, particularly during
the period immediately following the opening of a new store. The Company may
open new rental-purchase stores that are unprofitable or have inconsistent
profitability. Currently, the Company expects to open 50 new stores during 1998.
New stores opened during 1998 are expected to operate at a loss for a period of
six to nine months. The opening of an unprofitable store or a store that has
inconsistent profitability could have a material adverse effect on the Company's
results of operations and financial condition. Because of these factors,
quarterly results may vary from quarter to quarter, and the market price of
Common Stock may fluctuate substantially.
The RTO Merger. The success of the RTO Merger will be determined by
various factors, including the financial performance of the Company's operations
after the RTO Merger and management's ability to effectively integrate the
operations of the Company and RTO. The integration of the operations of the
Company and RTO may be negatively affected if costs or difficulties related to
the integration are greater than the Company expects. In addition, there can be
no assurance that the anticipated benefits of the RTO Merger will be realized by
the Company or that the RTO Merger will not adversely affect the future
operating results of the Company.
Management of Growth. The rapid growth experienced by the Company has
placed significant demands on the Company's management and operations. In
addition, certain of the officers and other key employees of the Company have
recently joined the Company in connection with the RTO Merger, and certain of
the Company's current senior executive officers have no prior management
experience in large companies. The recent expansion has also resulted in
substantial growth in the number of employees, the scope of operating
4
<PAGE> 10
and financial systems and the geographic area of operations, resulting in
increased responsibility for both existing and new management personnel. The
Company's ability to support the growth of its business will be substantially
dependent upon its ability to attract and retain highly-trained management
personnel. In addition, the Company's future operating results will depend upon
the ability of its officers and other key employees to continue to implement and
improve its operational and financial control systems, to train and manage its
employees and to work effectively with the suppliers of the Company's products.
There can be no assurance that the Company will be able to manage its recent or
any future expansion successfully, and any inability to do so could have a
material adverse effect on the Company's results of operations or financial
condition.
Financing Growth Strategy. It is anticipated that future acquisitions and
new store openings will be financed with cash from operations, borrowings under
available credit facilities, net proceeds from the sale of debt or equity
securities and issuances of additional equity securities as consideration. If
the Company cannot make such acquisitions with its equity securities and does
not have sufficient cash from operations, the ability to borrow under these
credit facilities or the ability to raise cash through the sale of debt or
equity securities, the Company will be unable to pursue its growth strategy,
which would have a material adverse effect on the Company's ability to increase
its revenue and net income and could have a material adverse effect on the
Company's financial condition or results of operations.
Competition. The rental-purchase industry is highly competitive.
Competition is based primarily on store location, product selection and
availability, customer service and rental rates and terms. Competitors of the
Company include national, regional and local operators of rental-purchase
stores. Some of these competitors may have significantly greater financial and
operating resources and, in certain markets, greater name recognition than the
Company. Because barriers to entry in the rental-purchase industry are
relatively low, competition may arise from new sources not currently competing
with the Company. As a result of these competitive conditions, the Company may
not be able to sustain past levels of revenue or continue the recent revenue
growth or profitability of the Company.
Government Regulation. Forty-eight states have adopted legislation
regulating rental-purchase transactions. Of those states, 45 require companies
to provide certain disclosures to customers regarding the terms of the
rental-purchase transaction. North Carolina, Wisconsin and Minnesota regulate
rental-purchase transactions as credit sales subject to consumer lending
restrictions. North Carolina and Minnesota subject the transactions to interest
rate or finance charge limitations. In addition, recent court decisions in New
Jersey have created a legal environment in that state which is prohibitive to
rental-purchase transactions. The Company operates in North Carolina but does
not operate in the other three states. Twenty-two of the 23 states in which the
Company operates impose some type of disclosure requirements, either in
advertising or in the rental-purchase agreement, or both. The regulations in
these states also distinguish rental-purchase transactions from credit sales.
The management of the Company believes that its operations are in material
compliance with applicable state rental-purchase laws. Although certain proposed
federal regulations are under consideration, no federal legislation has been
enacted regulating rental-purchase transactions. As of the date hereof, two
bills have been introduced in Congress that would regulate the rental-purchase
industry. One of the bills is supported by the Association of Progressive Rental
Organizations ("APRO") and the Company does not believe that this bill, if
enacted, would have a material adverse effect upon the Company's operations. The
other bill would regulate rental-purchase transactions as credit sales. The
Company believes that in the event federal legislation is enacted regulating
rental-purchase transactions as credit sales, the Company would be able to adapt
to the new laws and remain profitable by repositioning itself as a rent-to-rent
business. However, there can be no assurance that the proposed legislation, if
enacted, would not have a material adverse effect on the Company's results of
operation and financial condition.
Dividend Policy. The Company expects to retain earnings to finance the
growth and development of its business and does not anticipate paying cash
dividends on Common Stock in the foreseeable future. Under the Company's current
credit facility, the Company is subject to certain restrictions on its ability
to declare or pay dividends.
5
<PAGE> 11
Risks Associated with the Rental-Purchase Industry. The operating success
of the Company, like other participants in the rental-purchase industry, will
depend upon a number of factors. These factors include the ability to maintain
and increase the number of units on rent, the collection of rental payments when
due and the control of inventory and other costs. The rental-purchase industry
is also affected by changes in consumer confidence, preferences and attitudes,
as well as general economic factors. Failure to control operations and respond
to changing market trends could adversely affect the future operations of the
Company.
Anti-Takeover Provisions. Certain provisions of the Amended and Restated
Articles of Incorporation of the Company (the "Articles") and the Amended and
Restated Bylaws of the Company (the "Bylaws") and certain sections of the
Indiana Business Corporation Law (the "IBCL") may be deemed to have an anti-
takeover effect and may discourage takeover attempts not first approved by the
Alrenco Board (including takeovers which the shareholders of the Company (the
"Shareholders") may deem to be in their best interests). In addition, the IBCL
imposes restrictions upon change of control transactions and certain business
combination transactions. See "Description of Capital Stock -- Preferred Stock;"
" -- Certain Anti-Takeover Matters;" and " -- Indiana Anti-Takeover Statutes."
Volatility of Stock Price. From time to time, there may be significant
volatility in the market price for the Common Stock. Quarterly operating results
of the Company or of other rental-purchase companies, changes in general
economic conditions, the financial markets or the rental-purchase industry, or
other developments could cause the market price of the Common Stock to fluctuate
substantially.
Control by Principal Shareholders. George D. Johnson, Jr., Chairman of the
Alrenco Board, together with his affiliates, and Michael D. Walts, a director of
the Company, own approximately 14.0% and 13.2%, respectively, of the outstanding
shares of Common Stock. As a result, Messrs. Johnson and Walts may be in a
position to control or significantly influence the management and policies of
the Company through their ability to influence the outcome of elections of the
Alrenco Board and certain other matters requiring the vote or consent of the
Shareholders.
Shares Eligible for Future Sale in Connection with RTO Merger. The Company
issued a substantial number of shares of Common Stock to the stockholders of RTO
in the RTO Merger. All of the Common Stock issued to such stockholders, other
than to affiliates of RTO or to those persons who are now affiliates of the
Company, are freely tradeable. Sales of a substantial number of shares of Common
Stock in the public market by former stockholders of RTO, or the perception that
such sales could occur, could adversely affect the prevailing market price of
shares of Common Stock and could impair the Company's ability to use shares of
Common Stock to raise additional equity capital or to make future acquisitions
of rental-purchase businesses.
6
<PAGE> 12
DESCRIPTION OF ALRENCO CAPITAL STOCK
The authorized capital stock of the Company consists of 75,000,000 shares
of Common Stock, no par value, and 10,000,000 shares of Preferred Stock. As of
the close of business on May 11, 1998 there were 16,975,271 shares of Common
Stock outstanding. There are no shares of the Company Preferred Stock
outstanding. The Company has reserved shares of its authorized Common Stock for
issuance from time to time pursuant to the 1998 Alrenco Stock Incentive Plan
(the "1998 Alrenco Plan"), the Stock Incentive Plan of the Company adopted in
November 1995, the RTO 1996 Employee Stock Option Plan (the "RTO Employee Plan")
and the RTO 1996 Stock Option Plan for Non-Employee Directors (the "RTO Director
Plan"). Except for additional options to be issued under the RTO Director Plan,
the Company will only issue options in the future under the 1998 Alrenco Plan.
The following description of the capital stock of the Company is qualified in
its entirety by reference to the Articles and the Bylaws, which have been
incorporated by reference as exhibits to the Registration Statement of which
this Prospectus is a part.
COMMON STOCK
Each Shareholder is entitled to one vote per share on all matters submitted
to a vote of Shareholders. Shareholders do not have cumulative voting rights.
Holders of Common Stock will be entitled to receive such dividends and other
distributions as may be declared by the Alrenco Board out of funds legally
available therefor. See "Summary -- Market Prices and Dividends." In the event
of the liquidation, dissolution or winding-up of affairs of the Company, holders
of Common Stock will be entitled to share ratably in all assets of the Company
remaining after payment or provision for payment of all debts, liabilities and
preferences, if any. Holders of Common Stock have no preemptive rights and no
right to convert their Common Stock into any other securities. The shares of
Common Stock are not redeemable.
PREFERRED STOCK
The Alrenco Board may, without further action by the Shareholders,
designate and issue from time to time up to 10,000,000 shares of the Preferred
Stock in one or more series and fix the rights and preferences thereof,
including voting rights, dividend rights and rates, redemption rights,
liquidation rights, conversion rights, and any other designations, preferences
and relative, participating, optional or other special rights, qualifications,
limitations or restrictions thereof not inconsistent with the Articles or the
IBCL. Such Preferred Stock could rank prior to the Common Stock with respect to
dividend rights and rights upon liquidation and could have rights which would
dilute the voting power of the Common Stock. Shares of the Preferred Stock may
also be issued to deter or delay an attempted takeover of the Company that may
be opposed by management of the Company. The Company currently has no plans to
issue any Preferred Stock.
CERTAIN ANTI-TAKEOVER MATTERS
Certain provisions of the Articles and the Bylaws concern matters of
corporate governance and the rights of shareholders. These provisions, as well
as the IBCL and the ability of the Alrenco Board to issue shares of Preferred
Stock and to set the voting rights, preferences and other terms thereof, may be
deemed to have an anti-takeover effect and may discourage takeover attempts not
first approved by the Alrenco Board (including takeovers which Shareholders may
deem to be in their best interests). These provisions and the ability of the
Alrenco Board to issue the Preferred Stock without further shareholder action,
also could delay or frustrate the removal of incumbent directors or the
assumption of control by the Shareholders, even if such removal or assumption
would be beneficial to the Shareholders. These provisions also could discourage
or make more difficult a merger, tender offer or proxy contest, even if a
transaction or contest could be favorable to interests of the Shareholders, and
could potentially depress the market price of the Common Stock. The Alrenco
Board believes that these provisions are appropriate to protect the interests of
the Company and the Shareholders. The Alrenco Board has no present plans to
adopt any other measures or provisions which may be deemed to have an
anti-takeover effect.
7
<PAGE> 13
Classification of Directors. Article VI of the Articles provides for the
classification of the Alrenco Board into three classes, each class to consist,
as nearly as possible, of one-third of the number of directors constituting the
entire Board, as determined in the Bylaws. Following their initial terms each
class will be elected for a three-year term. Beginning with the 1996 annual
meeting, one class will be elected each year with the terms of each class
expiring in successive years. Article VI is intended to ensure continuity of
Alrenco Board membership and impede the ability of a third party to make sudden
changes in directors through a proxy contest or the acquisition of a substantial
stock interest.
Removal of Directors. Article VI of the Articles provides that the
directors can be removed from that position only for cause. "Cause" means a
director's participation in any transaction in which his or her financial
interests conflict with those of the Company or the Shareholders; any act or
omission not in good faith or involving intentional misconduct or violation of
law; or the participation by a director in any transaction from which he or she
derived improper personal benefit. The purpose of this provision is to impose a
more stringent standard generally for the removal of directors, and also to
prevent a majority shareholder from circumventing the classified board structure
by simply voting to remove directors without cause.
Advance Notice Bylaw Provision. The Bylaws impose certain advance notice
requirements on a Shareholder nominating a director or submitting a proposal to
a shareholder meeting. This notice must be submitted to the Secretary of the
Company between 60 and 90 days before a meeting, and must contain the
information prescribed by the Bylaws.
Amendment of the Company Articles. Under the Articles and the IBCL,
amendments to the Articles must generally be approved by the Alrenco Board and
by the holders of at least 67% of the outstanding shares voting thereon at a
meeting of the Shareholders. Article VI of the Articles requires that any
amendment or repeal of those provisions be approved by the Shareholders owning
at least 80% of the total shares outstanding and entitled to vote generally in
the election of directors, voting together as a single class. The requirement
for an increased shareholder vote to amend Article VI is intended to prevent a
shareholder that controls a majority of the voting shares (or possibly less than
a majority) from avoiding the requirements of the classified board and removal
of directors provisions discussed above by simply repealing such provisions.
INDIANA ANTI-TAKEOVER STATUTES
Chapter 43 of the IBCL prohibits any business combination, such as a merger
or consolidation between an Indiana corporation with shares of its stock
registered under the federal securities laws or which makes an election under
the IBCL, and an "interested shareholder" (which is defined as any beneficial
owner, directly or indirectly, of 10% or more of the voting power of the
outstanding voting shares of such Indiana corporation) for five years after the
date on which such shareholder became an interested shareholder, unless the
stock acquisition which caused the person to become an interested shareholder
was approved in advance by the corporation's board of directors. This provision
of the IBCL is effective even if all parties should subsequently decide that
they wish to engage in the business combination. Chapter 42 of the IBCL contains
a "control share acquisition" provision which effectively denies voting rights
to shares of an "issuing public corporation" acquired in control share
acquisitions unless the grant of such voting rights is approved by a majority
vote of disinterested shareholders. An issuing public corporation is a
corporation that (i) has 100 or more shareholders; (ii) has its principal place
of business, its principal office or substantial assets within Indiana; and
(iii) either (a) more than 10% of its shareholders are Indiana residents, (b)
more than 10% of its shares are owned by Indiana residents, or (c) 10,000
shareholders resident in Indiana. A control share acquisition is one by which a
purchasing shareholder acquires more than one-fifth, one-third, or one-half of
the voting power of the stock of the Indiana corporation whose stock is
registered under the federal securities laws. In addition, if any person
proposing to make or who has made "control share acquisitions" does not file an
"acquiring person statement" with the issuing corporation or if the control
shares are not accorded full voting rights by other shareholders, and if the
articles of incorporation or by-laws of the corporation whose shares are
acquired authorize such redemption, the acquired shares are subject to
redemption by the corporation. Finally, if a control share acquisition should be
made of a majority or more of the corporation's voting stock, and those shares
are granted full voting rights, shareholders are granted dissenters' rights.
8
<PAGE> 14
LEGAL MATTERS
The legality of the shares of Common Stock being registered under the
Registration Statement of which this Prospectus is a part will be passed upon
for the Company by King & Spalding, Atlanta, Georgia.
EXPERTS
The consolidated balance sheets of Alrenco, Inc. as of December 31, 1996
and 1997 and the related consolidated statements of operations, stockholders'
equity (deficit) and cash flows for each of the three years in the period ended
December 31, 1997 after restatement for the 1998 pooling of interests with RTO,
Inc., included in Alrenco's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998 and incorporated by reference in this Prospectus, have been
incorporated herein in reliance (i) on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing and (ii) on the report of Grant Thornton LLP,
independent certified public accountants, on the balance sheets of Alrenco, Inc.
as of December 31, 1996 and 1997 and the related statements of earnings,
stockholders equity and cash flows for each of the three years in the period
ended December 31, 1997 prior to the restatement for the 1998 pooling of
interests with RTO, Inc., given on the authority of that firm as experts in
accounting and auditing. The report of Coopers & Lybrand L.L.P. incorporated
herein makes reference to the report of Grant Thornton LLP.
On February 26, 1998, immediately following the RTO Merger, the Alrenco
Board replaced Grant Thornton LLP as the principal independent auditor of
Alrenco. Effective February 26, 1998, Coopers and Lybrand L.L.P., previously the
principal independent auditor for RTO, was engaged by Alrenco to serve as the
independent auditor of Alrenco's financial statements for the 1998 fiscal year.
Grant Thornton LLP continued to serve as the independent auditor with respect to
Alrenco's financial statements for the fiscal year ended December 31, 1997,
prior to restatement for the 1998 pooling of interests with RTO, Inc. Neither of
the reports of Grant Thornton LLP on the financial statements of Alrenco for the
fiscal years ended December 31, 1997 and 1996 contained an adverse opinion or a
disclaimer of an opinion or was qualified or modified as to uncertainty, audit
scope or accounting principles. During the two fiscal years ended December 31,
1997, and during the interim periods preceding February 26, 1998, (i) there were
no disagreements with Grant Thornton LLP on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or procedure and
(ii) there were no "reportable events" (as defined in Item 304(a)(1)(v) of
Regulation S-K).
The financial statements of Action included in the Company's Registration
Statement on Form S-4 (SEC File No. 333-44451) and incorporated by reference
herein have been audited by the following firms as stated in their reports
included in such Registration Statement on Form S-4: (i) the financial
statements of Action as of and for the year ended December 31, 1995 have been
audited by Ernst & Young LLP, independent auditors and (ii) the financial
statements of Action as of and for the seven months ended July 31, 1996 have
been audited by Coopers & Lybrand L.L.P., independent accountants and have been
incorporated herein in reliance on such reports given upon the authority of said
firms as experts in accounting and auditing.
9
<PAGE> 15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Chapter 37 of the Indiana Business Corporation Law empowers an Indiana
corporation to indemnify an individual (including his estate or personal
representative) who was, is or is threatened to be made a named defendant or
respondent in a threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, and whether formal or
informal, because he is or was a director against liability incurred in the
proceeding if: (i) he conducted himself in good faith; (ii) he reasonably
believed, in the case of conduct in his official capacity with the corporation,
that his conduct was in its best interests and, in all other cases, that his
conduct was at least not opposed to its best interests; and (iii) in the case of
any criminal proceeding, he had (A) reasonable cause to believe his conduct was
lawful, or (B) no reasonable cause to believe his conduct was unlawful.
Indemnification may be made against the obligation to pay a judgment,
settlement, penalty, fine or reasonable expenses (including counsel fees)
incurred with respect to a proceeding. Pursuant to Chapter 37, a corporation may
pay for or reimburse the reasonable expenses incurred by a director in advance
pay for or reimburse the reasonable expenses incurred by a director in advance
of final disposition of the proceeding if (i) the director affirms to the
corporation in writing his good faith belief that he has met the standard of
conduct required for indemnification; (ii) the director undertakes the personal
obligation to repay such advance upon an ultimate determination that he failed
to meet such standard of conduct; and (iii) the corporation determines that the
facts then known to those making the determination would not preclude
indemnification.
Unless limited by the articles of incorporation, a director who has been
wholly successful, on the merits or otherwise, in the defense of any proceeding
to which he was a party because he is or was a director of the corporation is
entitled to indemnification against reasonable expenses incurred by him in
connection with the proceeding. Unless limited by its articles of incorporation,
an Indiana corporation may indemnify and advance expenses to an officer,
employee or agent of the corporation to the same extent that it may indemnify
and advance expenses to directors. An officer of the corporation is also
entitled to mandatory indemnification to the same extent as a director.
The indemnification provided by or granted pursuant to Chapter 37 is not
exclusive of any rights to which those seeking indemnification may otherwise be
entitled. Chapter 37 empowers an Indiana corporation to purchase and maintain
insurance on behalf of its directors, officers, employees or agents against
liability asserted against or incurred by the individuals in those capacities,
whether or not the corporation would have the power under Chapter 37 to
indemnify them against such liability. The Registrant has purchased and
maintains directors' and officers' liability insurance. The Registrant has also
entered into an agreement with Michael D. Walts, a director of the Registrant,
which requires the Registrant to indemnify the director to the fullest extent
permitted by Indiana law.
The Registrant's Amended and Restated Articles of Incorporation and Amended
and Restated Code of Bylaws require the Registrant to indemnify its directors to
the fullest extent permitted by applicable state or federal laws. The Bylaws
further permit the Registrant to indemnify its officers to the same extent that
it indemnifies directors and to such further extent, consistent with law, as may
be provided by general or specific action of the Board of Directors, or
contract.
Pursuant to the terms of the RTO Merger Agreement, the Registrant is
required to keep in effect provisions of its Articles of Incorporation and
Bylaws providing for indemnification of directors and officers to the fullest
extent permitted under applicable law and is prohibited from amending such
provisions except as may be required by applicable law or except to make changes
permitted by law that would enlarge the indemnified parties' indemnification
rights. The Registrant is also obligated to maintain in effect for a period of
at least six years following the effective time of the RTO Merger directors' and
officers' liability insurance providing at least the same coverage as, and
containing terms and conditions which are no less favorable than, the insurance
policies maintained by the Registrant as of the date of the RTO Merger
Agreement.
II-1
<PAGE> 16
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
The following exhibits are filed as part of this registration statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<C> <C> <S>
2.1 -- Agreement and Plan of Merger, dated as of September 28,
1997, by and between Alrenco, Inc. and RTO, Inc., as amended
(incorporated herein by reference to Exhibit 2 to
Registrant's Current Report on Form 8-K filed on October 9,
1997 (File No. 0-27490) and to Exhibit 2.1 to Registrant's
Current Report on Form 8-K filed on March 5, 1998).
2.2 -- Stock Purchase Agreement dated July 31, 1996 by and between
RTO, Inc. and Action TV & Appliance Rental, Inc.*
2.3 -- Asset Purchase Agreement dated January 7, 1997 among Action
Rent-to-Own of Florida, Inc., B&L Concepts, Inc., Bill Ogle
and Larry Sutton.*
3.1 -- Amended and Restated Articles of Incorporation of the
Registrant (incorporated herein by reference to Exhibit 3.1
to the Registrant's Current Report on Form 8-K filed on
March 5, 1998).
3.3 -- Amended and Restated Code of Bylaws of the Registrant
(incorporated herein by reference to Exhibit 3.2 to the
Registrant's Current Report on Form 8-K filed on March 5,
1998).
4.1 -- Specimen Stock Certificate (incorporated herein by reference
to exhibits filed with the Registrant's Registration
Statement on Form S-1 (File No. 33-99438) filed under the
Securities Act of 1933).
5.1 -- Opinion of King & Spalding.*
10.1 -- Noncompetition and Consulting Agreement between the
Registrant and Michael D. Walts dated February 26, 1998
(incorporated herein by reference to Exhibit 10.1 to
Registrant's Current Report on Form 8-K filed on March 5,
1998).
10.2 -- Revolving Credit Agreement dated February 26, 1998, between
the Registrant and Comerica Bank (incorporated herein by
reference to Exhibit 10.2 to Registrant's Current Report on
Form 8-K filed on March 5, 1998).
10.3 -- Guaranty Agreement dated as of February 26, 1998
(incorporated herein by reference to Exhibit 10.3 to
Registrant's Current Report on Form 8-K filed on March 5,
1998).
10.4 -- Security Agreement dated as of February 26, 1998
(incorporated herein by reference to Exhibit 10.4 to
Registrant's Current Report on Form 8-K filed on March 5,
1998).
10.5 -- Pledge Agreement of Alrenco, Inc. dated as of February 26,
1998 (incorporated herein by reference to Exhibit 10.5 to
Registrant's Current Report on Form 8-K filed on March 5,
1998).
10.6 -- Pledge Agreement of RTO Holding Co., Inc. dated February 26,
1998 (incorporated herein by reference to Exhibit 10.6 to
Registrant's Current Report on Form 8-K filed on March 5,
1998).
10.7 -- Amended and restated revolving Credit Agreement, dated April
1, 1998, with Comerica Bank, as agent, and Bank One, Texas,
N.A. as co-agent (incorporated herein by reference to
Exhibit 10.7 to the Registrant's Quarterly Report on Form
10-Q for the fiscal quarter ended March 31, 1998).
10.8 -- Reaffirmation of certain loan documents to the amended and
restated revolving Credit Agreement, dated April 1, 1998,
with Comerica Bank, as agent, and Bank One, Texas, N.A. as
co-agent (incorporated herein by reference to Exhibit 10.8
to the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1998).
10.9 -- Lease Agreement dated as of January 1, 1995 between the
Registrant and Kentuckiana Outfitting Company as amended
(incorporated herein by reference to exhibits filed with the
Registrant's registration statement on Form S-1 (File No.
33-99438) filed under the Securities Act of 1933).
</TABLE>
II-2
<PAGE> 17
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<C> <C> <S>
10.10 -- Lease Agreement dated as of January 1, 1995 between the
Registrant and Kentuckiana Outfitting Company as amended
(incorporated herein by reference to exhibits filed with the
Registrant's registration statement on Form S-1 (File No.
33-99438) filed under the Securities Act of 1933).
10.11 -- Life Insurance Policy for Michael D. Walts (incorporated
herein by reference to exhibits filed with the Registrant's
registration statement on Form S-1 (File No. 33-99438) filed
under the Securities Act of 1933).
10.12 -- Alrenco 1995 Stock Incentive Plan (incorporated herein by
reference to exhibits filed with the Registrant's
registration statement on Form S-1 (File No. 33-99438) filed
under the Securities Act of 1933).
10.13 -- RTO, Inc. 1996 Employee Stock Option Plan.*
10.14 -- RTO, Inc. 1996 Stock Option Plan for Non-Employee
Directors.*
10.15 -- The Registrant's 401(k) Salary Reduction Plan (incorporated
herein by reference to exhibits filed with the Registrant's
registration statement on Form S-1 (File No. 33-99438) filed
under the Securities Act of 1933).
10.16 -- Form of Director Indemnification Agreement (incorporated
herein by reference to exhibits filed with the Registrant's
registration statement on Form S-1 (File No. 33-99438) filed
under the Securities Act of 1933).
10.17 -- Lease Agreement dated January 1, 1993 by and between Billy
W. White dba White Property Co. #2 and Action TV & Appliance
Rental, Inc., as amended.*
10.18 -- Lease Agreement dated June 1, 1992 by and between Bill White
and Action TV & Appliance Rental, Inc.*
10.19 -- Shopping Center Lease dated May 1, 1996 by and between White
Property Co. No. 2, Ltd. and Action TV & Appliance Rental,
Inc.*
10.20 -- Aircraft Dry Lease dated April 8, 1997 by and between
Wyoming Associates, Inc. and RTO, Inc.*
10.21 -- Aircraft Dry Lease dated April 8, 1997 by and between
Wyoming Associates, Inc. and RTO, Inc.*
16.1 -- Letter of Grant Thornton LLP.*
23.1 -- Consent of Grant Thornton LLP.
23.2 -- Consent of Coopers & Lybrand L.L.P.
23.3 -- Consent of Ernst & Young LLP.
23.4 -- Consent of King & Spalding.*
24.1 -- Powers of Attorney*
</TABLE>
- ---------------
* Previously filed.
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
II-3
<PAGE> 18
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total value of securities
offered would not exceed that which was registered) and any deviation from
the low or high and of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent
no more than 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee table in the effective
registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through the use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The registrant undertakes that every prospectus: (i) that is filed pursuant
to the immediately preceding paragraph, or (ii) purports to meet the requirement
s of Section 10(a)(3) of the Securities Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy and expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel that
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to its Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized in the city of Mesquite,
state of Texas, on May 13, 1998.
ALRENCO, INC.
By: /s/ K. DAVID BELT
--------------------------------------
K. David Belt
Chief Financial Officer, Treasurer
and Assistant Secretary
Pursuant to the requirements of the Securities Act, this Amendment No. 1 to
Registration Statement has been signed by the following persons in the
capacities indicated below on May 13, 1998:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
* Chairman of the Board of Directors
- --------------------------------------------------------
George D. Johnson, Jr.
* Chief Executive Officer and Director
- -------------------------------------------------------- (Principal Executive Officer)
Billy W. White, Sr.
* Chief Financial Officer, Treasurer and
- -------------------------------------------------------- Assistant Secretary (Principal Financial and
K. David Belt Accounting Officer)
* Director
- --------------------------------------------------------
Edward W. Phifer, III
* Director
- --------------------------------------------------------
John S. Rainey
* Director
- --------------------------------------------------------
Thomas E. Hannah
Director
- --------------------------------------------------------
Michael D. Walts
*By: /s/ K. DAVID BELT
---------------------------------------------------
K. David Belt
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 20
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<C> <C> <S>
2.1 -- Agreement and Plan of Merger, dated as of September 28,
1997, by and between Alrenco, Inc. and RTO, Inc., as amended
(incorporated herein by reference to Exhibit 2 to
Registrant's Current Report on Form 8-K filed on October 9,
1997 (File No. 0-27490) and to Exhibit 2.1 to Registrant's
Current Report on Form 8-K filed on March 5, 1998).
2.2 -- Stock Purchase Agreement dated July 31, 1996 by and between
RTO, Inc. and Action TV & Appliance Rental, Inc.*
2.3 -- Asset Purchase Agreement dated January 7, 1997 among Action
Rent-to-Own of Florida, Inc., B&L Concepts, Inc., Bill Ogle
and Larry Sutton.*
3.1 -- Amended and Restated Articles of Incorporation of the
Registrant (incorporated herein by reference to Exhibit 3.1
to the Registrant's Current Report on Form 8-K filed on
March 5, 1998).
3.3 -- Amended and Restated Code of Bylaws of the Registrant
(incorporated herein by reference to Exhibit 3.2 to the
Registrant's Current Report on Form 8-K filed on March 5,
1998).
4.1 -- Specimen Stock Certificate (incorporated herein by reference
to exhibits filed with the Registrant's Registration
Statement on Form S-1 (File No. 33-99438) filed under the
Securities Act of 1933).
5.1 -- Opinion of King & Spalding.*
10.1 -- Noncompetition and Consulting Agreement between the
Registrant and Michael D. Walts dated February 26, 1998
(incorporated herein by reference to Exhibit 10.1 to
Registrant's Current Report on Form 8-K filed on March 5,
1998).
10.2 -- Revolving Credit Agreement dated February 26, 1998, between
the Registrant and Comerica Bank (incorporated herein by
reference to Exhibit 10.2 to Registrant's Current Report on
Form 8-K filed on March 5, 1998).
10.3 -- Guaranty Agreement dated as of February 26, 1998
(incorporated herein by reference to Exhibit 10.3 to
Registrant's Current Report on Form 8-K filed on March 5,
1998).
10.4 -- Security Agreement dated as of February 26, 1998
(incorporated herein by reference to Exhibit 10.4 to
Registrant's Current Report on Form 8-K filed on March 5,
1998).
10.5 -- Pledge Agreement of Alrenco, Inc. dated as of February 26,
1998 (incorporated herein by reference to Exhibit 10.5 to
Registrant's Current Report on Form 8-K filed on March 5,
1998).
10.6 -- Pledge Agreement of RTO Holding Co., Inc. dated February 26,
1998 (incorporated herein by reference to Exhibit 10.6 to
Registrant's Current Report on Form 8-K filed on March 5,
1998).
10.7 -- Amended and Restated revolving Credit Agreement, dated April
1, 1998, with Comerica Bank, as agent, and Bank One, Texas,
N.A. as co-agent (incorporated herein by reference to
Exhibit 10.7 to the Registrant's Quarterly Report on Form
10-Q for the fiscal quarter ended March 31, 1998).
10.8 -- Reaffirmation of certain loan documents to the amended and
restated revolving Credit Agreement, dated April 1, 1998,
with Comerica Bank, as agent, and Bank One, Texas, N.A. as
co-agent (incorporated herein by reference to Exhibit 10.8
to the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1998).
10.9 -- Lease Agreement dated as of January 1, 1995 between the
Registrant and Kentuckiana Outfitting Company as amended
(incorporated herein by reference to exhibits filed with the
Registrant's registration statement on Form S-1 (File No.
33-99438) filed under the Securities Act of 1933).
</TABLE>
<PAGE> 21
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<C> <C> <S>
10.10 -- Lease Agreement dated as of January 1, 1995 between the
Registrant and Kentuckiana Outfitting Company as amended
(incorporated herein by reference to exhibits filed with the
Registrant's registration statement on Form S-1 (File No.
33-99438) filed under the Securities Act of 1933).
10.11 -- Life Insurance Policy for Michael D. Walts (incorporated
herein by reference to exhibits filed with the Registrant's
registration statement on Form S-1 (File No. 33-99438) filed
under the Securities Act of 1933).
10.12 -- Alrenco 1995 Stock Incentive Plan (incorporated herein by
reference to exhibits filed with the Registrant's
registration statement on Form S-1 (File No. 33-99438) filed
under the Securities Act of 1933).
10.13 -- RTO, Inc. 1996 Employee Stock Option Plan.*
10.14 -- RTO, Inc. 1996 Stock Option Plan for Non-Employee
Directors.*
10.15 -- The Registrant's 401(k) Salary Reduction Plan (incorporated
herein by reference to exhibits filed with the Registrant's
registration statement on Form S-1 (File No. 33-99438) filed
under the Securities Act of 1933).
10.16 -- Form of Director Indemnification Agreement (incorporated
herein by reference to exhibits filed with the Registrant's
registration statement on Form S-1 (File No. 33-99438) filed
under the Securities Act of 1933).
10.17 -- Lease Agreement dated January 1, 1993 by and between Billy
W. White dba White Property Co. #2 and Action TV & Appliance
Rental, Inc., as amended.*
10.18 -- Lease Agreement dated June 1, 1992 by and between Bill White
and Action TV & Appliance Rental, Inc.*
10.19 -- Shopping Center Lease dated May 1, 1996 by and between White
Property Co. No. 2, Ltd. and Action TV & Appliance Rental,
Inc.*
10.20 -- Aircraft Dry Lease dated April 8, 1997 by and between
Wyoming Associates, Inc. and RTO, Inc.*
10.21 -- Aircraft Dry Lease dated April 8, 1997 by and between
Wyoming Associates, Inc. and RTO, Inc.*
16.1 -- Letter of Grant Thornton LLP.*
23.1 -- Consent of Grant Thornton LLP.
23.2 -- Consent of Coopers & Lybrand L.L.P.
23.3 -- Consent of Ernst & Young LLP.
23.4 -- Consent of King & Spalding.*
24.1 -- Powers of Attorney.*
</TABLE>
- ---------------
* Previously filed.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated January 30, 1998, accompanying the
consolidated financial statements of Alrenco, Inc. and subsidiaries, after
restatement for the 1998 pooling of interests with RTO, Inc. included in the
Quarterly Report of Alrenco, Inc. on Form 10-Q for the quarter ended March 31,
1998. We consent to the incorporation by reference in the Registration Statement
of the aforementioned report and to the use of our name as it appears under the
caption "Experts."
GRANT THORNTON LLP
Dallas, Texas
May 12, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
of Alrenco, Inc. on Form S-4 of our report dated January 31, 1997, on our audit
of the financial statements of Action TV & Appliance Rental, Inc. as of and for
the seven month period ended July 31, 1996, appearing in the registration
statement on Form S-4 (SEC File No. 333-44451) of Alrenco, Inc. filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933. We
also consent to the incorporation by reference in this registration statement of
Alrenco, Inc. on Form S-4 of our report dated March 3, 1998 on our audits of the
consolidated financial statements of Alrenco, Inc. and subsidiaries, after
restatement for the 1998 pooling of interest with RTO, Inc. as described in Note
1 to those financial statements, as of December 31, 1996 and 1997 and for each
of the three years in the period ended December 31, 1997, which report is
included in the Quarterly Report on Form 10-Q of Alrenco, Inc. for the quarter
ended March 31, 1998 as filed with the Securities and Exchange Commission. We
also consent to the references to our firm under the captions "Experts" and
"Selected Financial Data."
COOPERS & LYBRAND L.L.P.
Raleigh, North Carolina
May 13, 1998
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) of Alrenco, Inc. and to the incorporation by
reference therein of our report dated November 4, 1996 with respect to the
financial statements of Action TV & Appliance Rental, Inc. for the year ended
December 31, 1995 included in the Registration Statement (Form S-4 No.
333-44451) of Alrenco, Inc. filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Dallas, Texas
May 12, 1998
