"I don't know of any other quarter that [could] match this quarter's achievements..." "We're proud of our past, we like the present, but we're even more excited about our future"
Ken Butler
President, Sales and Lease Ownership Division

Aaron Rents held a conference call today to discuss it's record results for the 3 months ending September 30th.

Among the most impressive results, were the companies same store revenue and customer growth.

Comparing same store growth from company to company is difficult because reporting standards vary. But of the companies reporting so far, Aaron Rents is in second place (behind Bestway) with a 9.8% increase.

Rent a Center reported a decreasing customer count due primarily to higher than normal payouts as a result of the child tax credits. Ken Butler, president of Aaron Rents Sales and Lease Ownership division, said Wednesday that Aarons saw no such affect. "We saw little or no affect to our payouts as a result of the tax credits," said Mr. Butler. Aaron's same store customer growth was 10% for the quarter, and has increased 28.4% in the last 12 months.

According to Mr. Butler, core stores (not counting acquisitions, franchise stores, or Sight and Sound) gained 6,000 customers in the last 3 months vs a gain of 4,500 for the same period last year.

In an interview with RTO Online after the call, Mr. Butler stated that Q3 2003 payouts were 3.6% percent, vs 3.4% for Q3 2002. Aaron Rents early payout formula is the same as Rent a Center; Cash price minus 50% of rent paid.

In Q3, Aaron's acquired 23 stores, acquired 20 franchise stores, opened 3 new stores, and merged 23 acquired stores into existing Aaron locations. The net result was a gain of 46 new storefronts.

The company plans to continue it's aggressive store opening campaign by opening 16 to 20 franchise and 14 - 18 company locations by year end. Since October 1, Aarons has acquired 3 more franchise locations in an extension of the offer made to all Aaron franchisees in August. Aarons offered to buy franchised locations for up to 11 time monthly revenue. The generous offer was politely declined by the majority of franchisees. 2 out of 3 franchisees that sold out to the company have opened more stores. Ken Butler stated that "One of our franchisees is even looking at Alaska."

Ken Butler announced the launch of "Project Blackjack". Blackjack is being tested at 21 locations and is intended to help managers find creative ways to run stores more profitably. Changes being tested are staffing, store hours, a new bar-coding system, GPS (global positioning system) in delivery trucks, and auto dialing technology to handle customer accounts. "We expect these stores to lead our way into the future," said Mr. Butler.

Aaron manufactures it's own upholstery line under the brand MacTavish. The manufacturing division has added additional production lines to meet the demand for upholstery by the sales and lease ownership division.

Gil Danielson, Chief financial officer, said the company is on track to meet it's goal of exceeding $1 billion dollars in system wide revenues this year.

As of Sept 30, there were 482 company operated stores and 248 franchise locations.

The company has zero bank debt.

Aarons has opened Sales and Lease Ownership stores in Oklahoma markets where Sight and Sound stores are located. Growth in both Sight and Sound and Aaron Rents in these markets is being viewed as verification that the two models can coexist. Ken Butler stated that "We've had as good or better growth out of our Oklahoma stores as we've had out of any stores in the country. The model that we have created with Sight and Sound is a separate market."

Aaron's began renting lawn tractors last year. The company will continue the practice due to the high retention level of these agreements.

Aarons first Canadian franchise store will open in November. CEO Charles Loudermilk said that a second franchisee has signed a development agreement for 6 Canadian locations.

When asked if the Canadian market was ready for Aaron's monthly pay system, Ken Butler said, "I think the Canadian profile isn't conducive to weekly payments." This will come as a surprise to easyhome, Canada's largest rent to own company with 131 locations. Mr. Butler added that he thinks the "low end" in Canada is not what it is in the US. CEO Charles Loudermilk complimented easyhome management on their much improved Canadian operation since the company consolidated it's 6 brands and revamped all locations.

At press time, Aaron's stock (RNT) was up $0.21 or .95% to $22.40 per share.