<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report under Section 13 or 15 (d)
of the Securities Exchange Act of l934
SEPTEMBER 30, 1998 0-12385
------------------ -------
For Quarter Ended Commission File No.
AARON RENTS, INC.
-----------------
(Exact name of registrant as
specified in its charter)
GEORGIA 58-0687630
------- ----------
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
309 E. PACES FERRY ROAD, N.E.
ATLANTA, GEORGIA 30305-2377
---------------- ----------
(Address of principal executive offices) (Zip Code)
(404) 231-0011
--------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
(FORMER NAME, FORMER ADDRESS AND FORMER
FISCAL YEAR, IF CHANGED SINCE LAST REPORT)
Indicate by check mark whether registrant (l) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
l934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X
---
No
---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Shares Outstanding as of
Title of Each Class November 12, 1998
------------------- -----------------
<S> <C>
Common Stock, $.50 Par Value 17,090,391
Class A Common Stock, $.50 Par Value 3,836,506
</TABLE>
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
AARON RENTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(unaudited)
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
(in thousands)
ASSETS:
Cash $ 98 $ 96
Accounts Receivable 14,704 11,794
Rental Merchandise 278,406 246,498
Less: Accumulated Depreciation (82,124) (69,530)
--------- ---------
196,282 176,968
Property, Plant and Equipment, Net 47,655 39,757
Prepaid Expenses and Other Assets 14,550 10,767
--------- ---------
Total Assets $ 273,289 $ 239,382
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts Payable and Accrued Expenses $ 32,716 $ 31,071
Dividends Payable 379
Deferred Income Taxes Payable 9,216 6,687
Customer Deposits and Advance Payments 9,469 8,304
Bank Debt 49,879 75,904
Other Debt 2,073 582
--------- ---------
Total Liabilities 103,353 122,927
Shareholders' Equity:
Common Stock, Par Value $.50 Per
Share; Authorized: 25,000,000 Shares;
Shares Issued: 18,270,987 at September 30, 1998 9,135 8,085
and 16,170,987 at December 31, 1997
Common Stock, Class A, Par Value $.50 Per
Share; Authorized: 25,000,000 Shares;
Shares Issued: 5,361,761 2,681 2,681
Additional Paid in Capital 54,493 15,484
Retained Earnings 129,188 113,864
--------- ---------
195,497 140,114
Less: Treasury Shares at Cost,
Common Stock, 1,198,596 Shares
at September 30, 1998 and 1,058,041
Shares at December 31, 1997 (11,425) (9,523)
Class A Common Stock, 1,525,255 Shares
at September 30, 1998 and December 31, 1997 (14,136) (14,136)
--------- ---------
Total Shareholders' Equity 169,936 116,455
--------- ---------
Total Liabilities and
Shareholders' Equity $ 273,289 $ 239,382
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 3
AARON RENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------- --------------------
September 30, September 30,
-------------------- --------------------
1998 1997 1998 1997
-------------------- --------------------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C>
REVENUES:
Rentals and Fees $ 73,662 $ 56,940 $215,640 $171,961
Retail Sales 15,761 15,068 47,278 44,491
Non-Retail Sales 4,190 2,625 13,397 9,305
Other 2,269 1,605 6,208 4,426
-------- -------- -------- --------
95,882 76,238 282,523 230,183
-------- -------- -------- --------
COSTS AND EXPENSES:
Retail Cost of Sales 11,245 10,662 33,470 32,190
Non-Retail Cost of Sales 3,919 2,491 12,482 8,732
Operating Expenses 48,825 36,796 142,165 110,932
Depreciation
of Rental Merchandise 23,036 17,484 65,686 53,030
Interest 828 922 2,921 2,728
-------- -------- -------- --------
87,853 68,355 256,724 207,612
-------- -------- -------- --------
EARNINGS BEFORE TAXES 8,029 7,883 25,799 22,571
INCOME TAXES 3,123 3,078 10,053 8,821
-------- -------- -------- --------
NET EARNINGS $ 4,906 $ 4,805 $ 15,746 $ 13,750
======== ======== ======== ========
EARNINGS PER SHARE $ .23 $ .25 $ .78 $ .71
-------- -------- -------- --------
EARNINGS PER SHARE
ASSUMING DILUTION $ .23 $ .25 $ .76 $ .70
-------- -------- -------- --------
CASH DIVIDENDS DECLARED
PER SHARE
Common Stock $ -- $ -- $ .02 $ .02
-------- -------- -------- --------
Class A Common Stock $ -- $ -- $ .02 $ .02
-------- -------- -------- --------
WEIGHTED AVERAGE
SHARES OUTSTANDING 21,091 18,963 20,159 19,238
======== ======== ======== ========
WEIGHTED AVERAGE
SHARES OUTSTANDING
ASSUMING DILUTION 21,508 19,548 20,619 19,659
======== ======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 4
AARON RENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS
OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
September 30,
-------------
1998 1997
--------- ---------
(in thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net Earnings $ 15,746 $ 13,750
Depreciation and Amortization 72,271 57,709
Deferred Income Taxes 2,529 1,843
Change in Accounts Payable and
Accrued Expenses 1,533 638
Change in Accounts Receivable (2,910) (997)
Other Changes, Net (2,011) 204
--------- ---------
Cash Provided by Operating Activities 87,158 73,147
--------- ---------
INVESTING ACTIVITIES
Additions to Property, Plant and Equipment (25,152) (8,486)
Book Value of Property Retired or Sold 11,127 6,016
Additions to Rental Equipment (129,432) (100,219)
Book Value of Rental Equipment Sold 45,320 42,752
Contracts and Other Assets Acquired (1,841) (177)
--------- ---------
Cash Used by Investing Activities (99,978) (60,114)
--------- ---------
FINANCING ACTIVITIES
Proceeds from Revolving Credit Agreement 122,158 72,202
Repayments on Revolving Credit Agreement (148,183) (76,487)
Proceeds from Common Stock Offering 39,958
Increase in Other Debt 1,491 588
Dividends Paid (801) (761)
Acquisition of Treasury Stock (2,454) (8,918)
Issuance of Stock Under Stock Option Plan 653 357
--------- ---------
Cash Provided (Used) by Financing Activities 12,822 (13,019)
--------- ---------
Increase in Cash 2 14
Cash at Beginning of Year 96 84
--------- ---------
Cash at End of Period $ 98 $ 98
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 5
AARON RENTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts of Aaron Rents, Inc.
("the Company") and its wholly-owned subsidiary. All significant intercompany
accounts and transactions have been eliminated.
INTERIM FINANCIAL STATEMENTS:
The Consolidated Balance Sheet as of September 30, 1998, and the Consolidated
Statements of Earnings and Cash Flows for the nine months ended September 30,
1998 and 1997, have been prepared without audit. In the opinion of management,
all adjustments necessary to present fairly the financial position, results of
operations and cash flows at September 30, 1998 and for all periods presented
have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these financial statements
be read in conjunction with the financial statements and notes thereto included
in the Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1997. The results of
operations for the period ended September 30, 1998 are not necessarily
indicative of the operating results for the full year.
PUBLIC OFFERING OF STOCK
On April 28, 1998, the Company issued through a public offering 2,100,000 shares
of Common Stock. The net proceeds to the Company after deducting underwriting
discounts and offering expenses were $40.0 million. The net proceeds were used
to reduce bank debt.
SUBSEQUENT EVENT
In October, 1998 the Company sold substantially all of the assets of its
Convention Furnishings division. The effect on the Company's results of
operations from this sale is not expected to be significant.
<PAGE> 6
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Note: Except for historical information contained herein, the matters set forth
in this Form 10-Q are forward-looking statements. The Company notes that the
forward-looking statements set forth involve a number of risks and uncertainties
that could cause actual results to differ materially from any such statement,
including the risks and uncertainties discussed in the Company's Prospectus
dated April 28, 1998, filed with the Securities and Exchange Commission, under
the caption "Risk Factors," which discussion is incorporated herein by this
reference.
RESULTS OF OPERATIONS:
THE QUARTER ENDED SEPTEMBER 30, 1998, COMPARED TO THE QUARTER ENDED SEPTEMBER
30, 1997:
Total revenues for the third quarter of 1998 increased $19.6 million (25.8%) to
$95.9 million compared to $76.2 million in 1997 due primarily to a $16.7 million
(29.4%) increase in rentals and fees revenues, plus a $2.3 million (12.8%)
increase in sales. Of this increase in rentals and fees revenues, $12.8 million
(65.9%) was attributable to the Aaron's Rental Purchase division. Rentals and
fees from the Company's rent-to-rent operations increased $3.9 million (14.6%)
during the same period.
Revenues from retail sales increased $693,000 (4.6%) to $15.8 million in 1998,
from $15.1 million for the same period last year. This increase was primarily
due to increased sales of both new and rental return merchandise in the Aaron's
Rental Purchase division and increased rental return sales in the Rent-to-Rent
division. Non-retail sales, which primarily represent merchandise sold to
Aaron's Rental Purchase franchisees, increased $1.6 million (59.6%) to $4.2
million compared to $2.6 million for the same period last year. The increased
sales are due to the growth of the franchise operations and the addition of a
fourth distribution center.
Other revenues for the third quarter of 1998 increased $664,000 (41.4%) to $2.3
million compared to $1.6 million in 1997. This increase was primarily
attributable to franchise fee and royalty income increasing $469,000 (33.8%) to
$1.9 million compared to $1.4 million last year, reflecting a net increase of 35
franchised stores since the end of the third quarter of 1997 and increased
operating revenues of maturing franchise stores.
Cost of sales from retail sales increased $583,000 (5.5%) to $11.2 million
compared to $10.7 million last year, and as a percentage of retail sales,
increased to 71.3% from 70.8%. The slight increase in cost of sales as a
percentage of sales is due to a greater percentage of the Company's sales coming
from rental return sales in the Rent-to-Rent division which are at lower
margins. Cost of sales from non-retail sales increased $1.4 million (57.3%) to
$3.9 million from $2.5 million, and as a percentage of sales, decreased slightly
to 93.5% from 94.9%.
Operating expenses increased $12.0 million (32.7%) to $48.8 million from $36.8
million. As a percentage of total revenues, operating expenses were 50.9% in
1998 and 48.3% in 1997. Operating expenses increased as a percentage of total
revenues between quarters primarily due to the Company's acquisitions of
RentMart Rent-To-Own, Inc. in December 1997 and Blackhawk Convention Services.
The RentMart stores are relatively immature and have lower revenues over which
to spread expenses and Blackhawk's convention furnishings business has higher
<PAGE> 7
operating expenses as a percentage of revenues than traditional rental purchase
and rent-to-rent operations.
Depreciation of rental merchandise increased $5.6 million (31.8%) to $23.0
million, from $17.5 million, and as a percentage of total rentals and fees,
increased to 31.3% from 30.7%. The increase as a percentage of rentals and fees
is primarily due to a greater percentage of the Company's rentals and fees
coming from the Aaron's Rental Purchase division which depreciates its rental
merchandise at a faster rate than the Rent-to-Rent division.
Interest expense decreased $94,000 (10.2%) to $828,000 compared to $922,000. As
a percentage of total revenues, interest expense was .8% in 1998 compared to
1.2% in 1997. The decrease in interest expense as a percentage of revenues was
due to lower debt levels after the Company's April 1998 public stock offering.
Income tax expense increased $45,000 (1.5%) to $3.1 million for 1998 compared to
$3.1 million for the same period in 1997. The Company's effective tax rate was
38.9% for the quarter versus 39.0% for the same period in 1997.
As a result, net earnings increased $101,000 (2.1%) to $4.9 million in the third
quarter of 1998 compared to $4.8 million for the same period in 1997. As a
percentage of total revenues, net earnings were 5.1% in the current quarter as
compared to 6.3% for the same period last year.
The weighted average number of shares outstanding during the third quarter of
1998 was 21,091,000 compared to 18,963,000 (21,508,000 versus 19,548,000
assuming dilution) for the same period last year.
NINE MONTHS ENDED SEPTEMBER 30, 1998, COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1997:
Total revenues for the first nine months of 1998 increased $52.3 million (22.7%)
to $282.5 million compared to $230.2 million in 1997 due primarily to a $43.7
million (25.4%) increase in rentals and fees revenues, plus a $6.9 million
(12.8%) increase in sales. Of this increase in rentals and fees revenues, $34.3
million (78.5%) was attributable to the Aaron's Rental Purchase division.
Rentals and fees from the Company's rent-to-rent operations increased $9.3
million (11.2%) during the same period.
Revenues from retail sales increased $2.8 million (6.3%) to $47.3 million in
1998, from $44.5 million for the same period last year. This increase was
primarily due to increased sales of both new and rental return merchandise in
the Aaron's Rental Purchase and Rent-to-Rent divisions. Non-retail sales, which
primarily represent merchandise sold to Aaron's Rental Purchase franchisees,
increased $4.1 million (44.0%) to $13.4 million compared to $9.3 million for the
same period last year. The increased sales are due to the growth of the
franchise operations and the addition of a fourth distribution center.
Other revenues for the first nine months of 1998 increased $1.8 million (40.3%)
to $6.2 million compared to $4.4 million in 1997. This increase was primarily
attributable to franchise fee and royalty income increasing $1.6 million (47.1%)
to $5.1 million compared to $3.4 million last year, reflecting a net increase of
35 franchised stores since the end of the third quarter of 1997 and increased
operating revenues of maturing franchise stores.
<PAGE> 8
Cost of sales from retail sales increased $1.3 million (4.0%) to $33.5 million
compared to $32.2 million last year, and as a percentage of retail sales,
decreased to 70.8% from 72.4%. The decrease in cost of sales as a percentage of
sales is due to improved margins in the Company's rent-to-rent operations and a
greater percentage of the Company's sales coming from the Aaron's Rental
Purchase division which are at higher margins. Cost of sales from non-retail
sales increased $3.8 million (47.9%) to $12.5 million from $8.7 million, and as
a percentage of sales, decreased to 93.2% from 93.8%. The decrease in cost of
sales as a percentage of sales is due to slightly higher margins on sales
through the Company's distribution centers.
Operating expenses increased $31.2 million (28.2%) to $142.2 million from $110.9
million. As a percentage of total revenues, operating expenses were 50.3% in
1998 and 48.2% in 1997. Operating expenses increased as a percentage of total
revenues between the periods primarily due to the Company's acquisitions of
RentMart Rent-To-Own, Inc. in December 1997 and Blackhawk Convention Services.
The RentMart stores are relatively immature and have lower revenues over which
to spread expenses and Blackhawk's convention furnishings business has higher
operating expenses as a percentage of revenues than traditional rental purchase
and rent-to-rent operations.
Depreciation of rental merchandise increased $12.7 million (23.9%) to $65.7
million, from $53.0 million, and as a percentage of total rentals and fees,
decreased to 30.5% from 30.8%. The decrease as a percentage of revenues is
primarily due to decreased depreciation in relation to revenues in both the
Company's Aaron's Rental Purchase and Rent-to-Rent divisions.
Interest expense increased $193,000 (7.1%) to $2.9 million compared to $2.7
million. As a percentage of total revenues, interest expense was 1.0% in 1998
compared to 1.2% in 1997. The decrease in interest expense as a percentage of
revenues was due to lower debt levels after the Company's April 1998 public
stock offering.
Income tax expense increased $1.2 million (14.0%) to $10.1 million for 1998
compared to $8.8 million for the same period in 1997. The Company's effective
tax rate was 39.0% for first nine months of 1998 versus 39.1% for the same
period in 1997.
As a result, net earnings increased $2.0 million (14.5%) to $15.7 million in the
first nine months of 1998 compared to $13.8 million for the same period in 1997.
As a percentage of total revenues, net earnings were 5.6% for the first nine
months of 1998 versus 6.0% for the same period in 1997.
The weighted average number of shares outstanding during the first nine months
of 1998 was 20,159,000 compared to 19,238,000 (20,619,000 versus 19,659,000
assuming dilution) for the same period last year.
LIQUIDITY AND CAPITAL RESOURCES:
During the first quarter of 1998, the Company paid a semi-annual dividend that
was declared in December 1997 of $.02 per share on both Common Stock and Class A
Common Stock, respectively. On May 5, 1998, the Company declared a semi-annual
dividend which was paid on July 7, 1998 of $.02 per share on both Common Stock
and Class A Common Stock, respectively.
<PAGE> 9
On April 28, 1998, the Company issued through a public offering 2,100,000 shares
of Common Stock. The net proceeds to the Company after deducting underwriting
discounts and offering expenses were $40.0 million. The net proceeds were used
to reduce bank debt.
Cash flow from operations for the nine months ended September 30, 1998 and 1997
was $87.2 million and $73.1 million, respectively. Such cash flows include
profits on the sale of rental return merchandise. The Company's primary capital
requirements consist of acquiring rental merchandise for both rent-to-rent and
Company-operated Aaron's Rental Purchase stores. As the Company continues to
grow, the need for additional rental merchandise will continue to be the
Company's major capital requirement. These capital requirements historically
have been financed through bank credit, cash flow from operations, trade credit,
proceeds from the sale of rental return merchandise, and proceeds from public
stock offerings.
The Company has financed its growth through a revolving credit agreement with
several banks, trade credit and internally generated funds. The revolving credit
agreement provides for unsecured borrowings up to $90.0 million which includes a
$6.0 million credit line to fund daily working capital requirements. At
September 30, 1998, an aggregate of $49.9 million was outstanding under this
facility, bearing interest at an average rate of 6.33%. The Company uses
interest rate swap agreements as part of its overall long-term financing
program. At September 30, 1998, the Company had swap agreements with notional
principal amounts of $40.0 million which effectively fixed the interest rates on
an equal amount of borrowings under the Company's revolving credit agreement at
7.18%.
The Company believes that the expected cash flows from operations, proceeds from
the sale of rental return merchandise, bank borrowings and vendor credit,
together with the proceeds from the stock offering on April 28, 1998, will be
sufficient to fund the Company's capital and liquidity needs for at least the
next 24 months.
YEAR 2000
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs or hardware that have date-sensitive software or embedded
chips may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, generate invoices, or engage in similar normal business
activities. The Company is continuing its assessments of the impact of the Year
2000 across its business and operations, including its customer and vendor base.
The Company has substantially completed its identification of information
technology systems ("IT systems") that are not Year 2000 compliant and is in the
process of implementing a comprehensive plan to make its IT systems and
non-information technology systems ("non-IT systems"), including embedded
electronic circuits in equipment and hardware, products, telecommunication,
building security and manufacturing equipment, Year 2000 compliant. The
Company's plan is to resolve the Year 2000 Issue involves the following four
phases: (1) assessment, (2) remediation, (3) testing, and (4) implementation.
The Company is simultaneously working on all four phases and anticipates that it
will substantially complete phase (1) by the end of the first quarter 1999, (2)
and (3) by the end of the second quarter 1999, and (4) by the end of the third
quarter 1999.
The Company is in the process of querying its significant suppliers and
subcontractors (external agents). To date, the Company is not aware of any
external agents with a Year 2000 issue that would materially impact the
Company's results of operations, liquidity, or capital resources. However, the
Company has no means of ensuring that external agents will be Year 2000
compliant. The inability of external agents to complete their Year 2000
resolution process in a timely fashion could materially impact the Company. The
effect of non-compliance by external agents is not determinable.
The Company's significant IT systems, including financial, accounting, store
operating and point-of-sale software have recently been or are in the process of
being updated. The upgrading and rewriting of the Company's IT systems is being
done to gain further strategic advantages over competitors and is not the result
of any anticipated Year 2000 issues. In addition, as part of the Company's
continuing process to update IT and non-IT systems, management has required
vendor-purchased and internally developed systems be Year 2000 compliant.
Therefore, management expects cost of the Year 2000 project to be less than
$100,000.
The Company has contingency plans for certain critical applications and is
working on such plans for others. These contingency plans involve, among other
actions, manual workarounds, and backup vendors.
Management of the Company believes it has an effective program in place to
resolve the Year 2000 issue in a timely manner. As noted above, the Company has
not yet completed all necessary phases of the Year 2000 program. In the event
that the Company does not complete any additional phases, the Company may be
unable to take customer orders, manufacture and ship products, invoice customers
or collect payments. In addition, disruptions in the economy generally resulting
from Year 2000 issues could also materially adversely affect the Company. The
Company could be subject to litigation for computer systems product failure, for
example, equipment shutdown or failure to properly date business records. The
amount of potential liability and lost revenue cannot be reasonably estimated at
this time. See "Special Note Regarding Forward-Looking Information."
<PAGE> 10
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) The following exhibits are furnished herewith:
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
--------- ----------------------
<S> <C>
27 Financial Data Schedule
</TABLE>
(b) No reports on Form 8-K were filed by the Registrant during the
three months ended September 30, 1998
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AARON RENTS, INC.
(Registrant)
Date - November 13, 1998 /s/ Gilbert L. Danielson
----------------- -----------------------------------
Gilbert L. Danielson
Executive Vice President
Chief Financial Officer
Date - November 13, 1998 /s/ Robert P. Sinclair, Jr.
----------------- -----------------------------------
Robert P. Sinclair, Jr.
Corporate Controller
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF AARON RENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 98
<SECURITIES> 0
<RECEIVABLES> 14,704
<ALLOWANCES> 0<F1>
<INVENTORY> 196,282<F2>
<CURRENT-ASSETS> 0<F3>
<PP&E> 47,655<F4>
<DEPRECIATION> 0<F4>
<TOTAL-ASSETS> 273,289
<CURRENT-LIABILITIES> 0<F3>
<BONDS> 0
0
0
<COMMON> 11,816
<OTHER-SE> 158,120
<TOTAL-LIABILITY-AND-EQUITY> 273,289
<SALES> 60,675
<TOTAL-REVENUES> 282,523
<CGS> 45,952
<TOTAL-COSTS> 253,803
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,921
<INCOME-PRETAX> 25,799
<INCOME-TAX> 10,053
<INCOME-CONTINUING> 15,746
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,746
<EPS-PRIMARY> .78
<EPS-DILUTED> .76
<FN>
<F1>THE ALLOWANCE OF DOUBTFUL ACCOUNTS IS NETTED AGAINST TOTAL ACCOUNTS RECEIVABLE
IN THE ACCOUNTS RECEIVABLE BALANCE.
<F2>RENTAL MERCHANDISE HAS BEEN CLASSIFIED AS INVENTORY FOR PURPOSES OF THIS
SCHEDULE. RENTAL MERCHANDISE HAS BEEN SHOWN NET OF 82,124 ACCUMULATED
DEPRECIATION.
<F3>THE FINANCIAL STATEMENTS ARE PRESENTED WITH AN UNCLASSIFIED BALANCE SHEET.
<F4>PP&E HAS BEEN SHOWN NET OF ACCUMULATED DEPRECIATION.
</FN>
</TABLE>
