Rent-A-Center: Furniture - Appliances - Computers - Electronics
NASDAQ GS: RCII
$11.15(-1.01)
Sep 20, 2017 4:00 p.m.(20 minute delay)
Press Release

Printer Friendly Version View printer-friendly version
<< Back
Rent-A-Center, Inc. Reports Fourth Quarter and Year End 2007 Results

  • Same Store Sales Increase 1.0% for the Quarter


  • Cash Flow from Operations Exceeds $240 Million for 2007


  • Announces Prospective Settlement of Shafer/Johnson Matter

PLANO, Texas--(BUSINESS WIRE)--Feb. 4, 2008--Rent-A-Center, Inc. (the "Company") (NASDAQ/NGS:RCII), the nation's largest rent-to-own operator, today announced revenues and earnings for the quarter and year ended December 31, 2007.

Fourth Quarter 2007 Results

The Company reported total revenues for the quarter ended December 31, 2007 of $717.0 million, an increase of $60.9 million from the reported total revenues of $656.1 million for the same period in the prior year. This 9.3% increase in revenues was primarily driven by the Rent-Way acquisition that closed on November 15, 2006. Same store revenues for the quarter ended December 31, 2007 increased 1.0%.

Reported net loss for the quarter ended December 31, 2007 was $5.4 million, as compared to the reported net loss of $2.3 million for the same period in the prior year. Reported net earnings for the quarter ended December 31, 2007 were reduced by a $38.7 million pre-tax restructuring expense related to our previously announced store consolidation plan and other restructuring items and an $11.0 million pre-tax litigation charge related to the prospective settlement of the Shafer/Johnson matter, as discussed below. Reported net earnings for the quarter ended December 31, 2006 were reduced by a $58.0 million pre-tax litigation charge related to the Hilda Perez matter and a $2.6 million pre-tax refinancing expense as discussed below.

Reported diluted loss per share for the quarter ended December 31, 2007 was $0.08, as compared to the reported diluted loss per share of $0.03 for the same period in the prior year. Reported diluted earnings per share for the quarter ended December 31, 2007 were reduced by $0.39 per share as a result of the restructuring expense related to our previously announced store consolidation plan and other restructuring items and an additional $0.11 per share as a result of the litigation expense related to the prospective settlement of the Shafer/Johnson matter, as discussed below. Adjusted diluted earnings per share were $0.42, when excluding the restructuring expense related to our previously announced store consolidation plan and other restructuring items and the litigation expense, as discussed below. Reported net earnings per diluted share for the quarter ended December 31, 2006 were reduced by $0.51 per share as a result of the litigation expense related to the Hilda Perez matter and an additional $0.02 per share as a result of refinancing expenses, as discussed below.

"We are generally pleased with the results for the fourth quarter, where we saw positive same store sales and total revenue and adjusted diluted earnings per share that was within our guidance range. At the same time, the business environment remains uncertain," commented Mark E. Speese, the Company's Chairman and Chief Executive Officer. "In 2008, we intend to focus on the execution of our previously announced store consolidation plan, devote resources to the overall customer experience in our stores, enhance store level operations, improve operational efficiencies, and further invest in our financial services business, while continuing to generate significant cash flow from operations and maintaining a solid balance sheet," Speese stated.

The Company also announced today that it has reached a prospective settlement with the plaintiffs to resolve the Eric Shafer et al. v. Rent-A-Center, Inc. and Victor E. Johnson et al. v. Rent-A-Center, Inc. coordinated matters pending in state court in Los Angeles, California. These matters allege violations by the Company of certain wage and hour laws of California. Under the terms contemplated, the Company anticipates it will pay an aggregate of $11.0 million in cash, including settlement costs and plaintiff's attorneys' fees, to be distributed to an agreed-upon class of Company employees from May 1998 through March 31, 2008. The Company would be entitled to any settlement fund monies not distributed under the terms of the prospective settlement. In connection with the prospective settlement, the Company is not admitting liability for its wage and hour practices in California. To account for the aforementioned costs, the Company recorded a pre-tax charge of $11.0 million in the fourth quarter of 2007. The terms of the prospective settlement are subject to the parties entering into a definitive settlement agreement and obtaining court approval. While the Company believes that the terms of this prospective settlement are fair, there can be no assurance that the settlement, if completed, will be approved by the court in its present form.

Year End December 31, 2007 Results

Total reported revenues for the twelve months ended December 31, 2007 were $2.906 billion, an increase of $0.472 billion from the reported total revenues of $2.434 billion for the same period in the prior year. This 19.4% increase in revenues was primarily driven by the Rent-Way acquisition that closed on November 15, 2006. Same store revenues for the twelve month period ending December 31, 2007 increased 2.1%.

Reported net earnings for the twelve months ended December 31, 2007 were $76.3 million, a decrease of $26.8 million from the reported net earnings of $103.1 million for the same period in the prior year. Reported net earnings for the twelve months ended December 31, 2007 were reduced by a $38.7 million pre-tax restructuring expense related to our previously announced store consolidation plan and other restructuring items, an $11.0 million pre-tax litigation charge related to the prospective settlement of the Shafer/Johnson matter and a $51.3 million pre-tax litigation charge related to the Hilda Perez matter, and were increased by a $3.9 million pre-tax benefit as a result of the receipt of accelerated royalty payments from franchisees in consideration of the termination of their franchise agreements, as discussed below. Reported net earnings for the twelve months ended December 31, 2006 were reduced by an aggregate of $73.3 million in pre-tax litigation expenses, and an aggregate of $4.8 million in pre-tax refinancing expenses, as discussed below.

Reported diluted earnings per share for the twelve months ended December 31, 2007 were $1.10, a decrease of $0.36 from the reported diluted earnings per share of $1.46 for the same period in the prior year. Reported diluted earnings per share for the twelve months ended December 31, 2007 were reduced by $0.37 per share as a result of the restructuring expense related to our previously announced store consolidation plan and other restructuring items, an additional $0.10 per share as a result of the litigation charge related to the prospective settlement of the Shafer/Johnson matter and $0.48 per share as a result of the litigation charge related to the Hilda Perez matter, and were increased by $0.04 per share as a result of the receipt of accelerated royalty payments from franchisees in consideration of the termination of their franchise agreements, as discussed below. Reported net earnings per diluted share for the twelve months ended December 31, 2006 were reduced by $0.65 per share as a result of litigation expenses and an additional $0.04 per share as a result of refinancing expenses, as discussed below.

Through the twelve month period ended December 31, 2007, the Company generated cash flow from operations of approximately $240.4 million, while ending the year with $97.4 million of cash on hand. During the twelve month period ended December 31, 2007, the Company repurchased 3,832,150 shares of its common stock for $83.4 million in cash under its common stock repurchase program. To date, the Company has repurchased a total of 18,460,950 shares and has utilized approximately $444.3 million of the $500.0 million authorized by its Board of Directors since the inception of the plan. In addition, during the twelve month period ended December 31, 2007, the Company reduced its outstanding indebtedness by approximately $33.9 million. Since December 31, 2007, the Company has further reduced its outstanding indebtedness by approximately $60.0 million.

Operations Highlights

During the fourth quarter of 2007, the Company opened seven new store locations, acquired accounts from four locations, and consolidated 287 stores into existing locations, for a net reduction of 280 stores and an ending balance as of December 31, 2007 of 3,081 company-owned stores. During the fourth quarter of 2007, the Company added financial services to nine existing rent-to-own store locations, acquired accounts from two locations, consolidated 14 stores with financial services into existing locations, and closed one location, ending the quarter with a total of 276 stores providing these services.

Through the twelve month period ended December 31, 2007, the Company opened 27 new store locations, acquired 14 stores as well as accounts from 34 additional locations, consolidated 363 stores into existing locations, and sold three stores, for a net reduction of 325 stores since December 31, 2006. Through the twelve month period ending December 31, 2007, the Company added financial services to 157 existing rent-to-own store locations, acquired accounts from two locations, consolidated 21 stores with financial services into existing locations, and closed 10 locations, for a net addition of 126 stores providing these services.

Since December 31, 2007, the Company has opened one new store location, acquired accounts from two locations, consolidated four stores into existing locations, and sold four stores. The Company has added financial services to four existing rent-to-own store locations and closed two locations since December 31, 2007.

2007 Significant Items

Shafer/Johnson. In the fourth quarter of 2007, the Company recorded a pre-tax expense of $11.0 million related to the prospective settlement of the Eric Shafer et al. v. Rent-A-Center, Inc. and Victor E. Johnson et al. v. Rent-A-Center, Inc. coordinated matters pending in state court in Los Angeles, California, as discussed above. This litigation expense reduced diluted earnings per share in the fourth quarter of 2007 by $0.11 and for the twelve month period ended December 31, 2007 by $0.10.

Store Consolidation Plan Expenses. During the fourth quarter of 2007, the Company recorded a pre-tax restructuring expense of approximately $38.7 million related to the store consolidation plan and other restructuring items announced on December 3, 2007. The costs with respect to these store closings relate primarily to lease terminations, fixed asset disposals and other miscellaneous items. This restructuring expense reduced diluted earnings per share in the fourth quarter of 2007 by $0.39 and for the twelve month period ended December 31, 2007 by $0.37.

Settlement with ColorTyme Franchisees. On July 31, 2007, ColorTyme entered into a settlement agreement with five affiliated ColorTyme franchisees pursuant to which the franchise agreements with respect to approximately 65 ColorTyme stores were terminated. ColorTyme received a cash payment in satisfaction of the contractually required, future royalties owed to ColorTyme pursuant to the franchise agreements. This settlement payment increased diluted earnings per share by approximately $0.04 for the twelve month period ended December 31, 2007.

Hilda Perez. On November 5, 2007, we paid an aggregate of $109.3 million, including plaintiffs' attorneys' fees and administration costs, pursuant to the court approved settlement of the Hilda Perez v. Rent-A-Center, Inc. matter pending in New Jersey. Under the terms of the settlement, the Company is entitled to 50% of any undistributed monies in the settlement. As previously reported, the Company recorded a pre-tax expense of $58.0 million in connection with the Perez matter during the fourth quarter of 2006, and an additional pre-tax charge of $51.3 million in the first quarter of 2007, to account for the aforementioned costs. The litigation expense with respect to the Perez settlement reduced diluted earnings per share by approximately $0.48 for the twelve month period ended December 31, 2007.

2006 Significant Items

2006 Litigation Expense

Hilda Perez. During the fourth quarter of 2006, the Company recorded a pre-tax expense of $58.0 million related to the Hilda Perez v. Rent-A-Center, Inc. matter. This litigation expense reduced diluted earnings per share by approximately $0.51 in the fourth quarter of 2006 and $0.52 for the twelve month period ended December 31, 2006.

Burdusis/French/Corso. In the first quarter of 2007, we paid approximately $4.95 million, including attorneys' fees, pursuant to the court approved settlement with the plaintiffs to resolve the Jeremy Burdusis, et al. v. Rent-A-Center, Inc., et al./Israel French, et al. v. Rent-A-Center, Inc. and Kris Corso, et al. v. Rent-A-Center, Inc. coordinated matters pending in state court in Los Angeles, California. The Company recorded a pre-tax expense of $4.95 million in the third quarter of 2006 to account for the settlement amount and attorneys' fees. This litigation expense reduced diluted earnings per share by approximately $0.04 for the twelve month period ended December 31, 2006.

California Attorney General. As announced on October 30, 2006, the Company reached a settlement with the California Attorney General to resolve the inquiry received in the second quarter of 2004 regarding the Company's business practices in California with respect to its cash prices and its membership program. As part of the settlement, the Company agreed to pay restitution to certain customers in the aggregate amount of approximately $9.6 million. The Company is in the process of finalizing the terms of the restitution program with the California Attorney General and expects to fund the restitution account as soon as reasonably practicable following the finalization of such terms. To account for the settlement costs, as well as the Company's attorneys' fees, the Company recorded a pre-tax charge of $10.35 million in the third quarter of 2006. The litigation expense with respect to the California Attorney General settlement reduced diluted earnings per share by approximately $0.09 for the twelve month period ended December 31, 2006.

2006 Refinancing Expense

2006 Senior Credit Facility Refinancing Expenses. During the third quarter of 2006, the Company recorded a pre-tax expense of approximately $2.2 million to write off the remaining unamortized balance of financing costs from our previous credit agreement closed in July 2004. This refinancing expense reduced diluted earnings per share by approximately $0.02 for the twelve month period ended December 31, 2006.

During the fourth quarter of 2006, the Company re-financed its credit agreement in connection with the Rent-Way acquisition and recorded a pre-tax expense of approximately $2.6 million to write off the remaining unamortized balance of financing costs from our previous credit agreement closed in July 2006. This refinancing expense reduced diluted earnings per share by approximately $0.02 in both the fourth quarter of 2006 and for the twelve month period ended December 31, 2006.

Rent-A-Center, Inc. will host a conference call to discuss the fourth quarter results, guidance and other operational matters on Tuesday morning, February 5, 2008, at 10:45 a.m. EST. For a live webcast of the call, visit http://investor.rentacenter.com. Certain financial and other statistical information that will be discussed during the conference call will also be provided on the same website.

Rent-A-Center, Inc., headquartered in Plano, Texas, currently operates approximately 3,080 company-owned stores nationwide and in Canada and Puerto Rico. The stores generally offer high-quality, durable goods such as major consumer electronics, appliances, computers and furniture and accessories under flexible rental purchase agreements that generally allow the customer to obtain ownership of the merchandise at the conclusion of an agreed upon rental period. ColorTyme, Inc., a wholly owned subsidiary of the Company, is a national franchiser of approximately 215 rent-to-own stores operating under the trade name of "ColorTyme."

The following statements are based on current expectations. These statements are forward-looking and actual results may differ materially. These statements do not include the potential impact of any repurchases of common stock the Company may make, or the potential impact of acquisitions or dispositions that may be completed after February 4, 2008.

FIRST QUARTER 2008 GUIDANCE:

Revenues

  • The Company expects total revenues to be in the range of $738 million to $753 million.


  • Store rental and fee revenues are expected to be between $632 million and $644 million.


  • Total store revenues are expected to be in the range of $727 million to $742 million.


  • Same store sales are expected to be in the flat to 1% range.


  • The Company expects to open approximately 5 new rent-to-own store locations.


  • The Company expects to add financial services to approximately 10 rent-to-own store locations.

Expenses

  • The Company expects cost of rental and fees to be between 22.6% and 23.0% of store rental and fee revenue and cost of merchandise sold to be between 68% and 72% of store merchandise sales.


  • Store salaries and other expenses are expected to be in the range of 56.8% to 58.3% of total store revenue.


  • General and administrative expenses are expected to be between 4.2% and 4.4% of total revenue.


  • Net interest expense is expected to be approximately $21 million, depreciation of property assets is expected to be approximately $18 million and amortization of intangibles is expected to be approximately $4 million.


  • The effective tax rate is expected to be approximately 37.0% of pre-tax income.


  • Diluted earnings per share are estimated to be in the range of $0.47 to $0.53.


  • Diluted shares outstanding are estimated to be between 66.8 million and 67.8 million.

FISCAL 2008 GUIDANCE:

Revenues

  • The Company expects total revenues to be in the range of $2.868 billion and $2.908 billion.


  • Store rental and fee revenues are expected to be between $2.515 billion and $2.555 billion.


  • Total store revenues are expected to be in the range of $2.830 billion and $2.870 billion.


  • Same store sales are expected to be in the flat to 2% range.


  • The Company expects to open approximately 40 new rent-to-own store locations.


  • The Company expects to add financial services to approximately 150 - 200 rent-to-own store locations.

Expenses

  • The Company expects cost of rental and fees to be between 22.6% and 23.0% of store rental and fee revenue and cost of merchandise sold to be between 72% and 76% of store merchandise sales.


  • Store salaries and other expenses are expected to be in the range of 57.0% to 58.5% of total store revenue.


  • General and administrative expenses are expected to be between 4.3% and 4.5% of total revenue.


  • Net interest expense is expected to be between $70 million and $75 million, depreciation of property assets is expected to be between $68 million and $73 million and amortization of intangibles is expected to be approximately $12 million.


  • The effective tax rate is expected to be approximately 37.0% of pre-tax income.


  • Diluted earnings per share are estimated to be in the range of $2.17 to $2.32.


  • Diluted shares outstanding are estimated to be between 67.0 million and 68.0 million.

This press release and the guidance above contain forward-looking statements that involve risks and uncertainties. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "could," "estimate," "should," "anticipate," or "believe," or the negative thereof or variations thereon or similar terminology. Although the Company believes that the expectations reflected in such forward-looking statements will prove to be correct, the Company can give no assurance that such expectations will prove to have been correct. The actual future performance of the Company could differ materially from such statements. Factors that could cause or contribute to such differences include, but are not limited to: uncertainties regarding additional costs and expenses that could be incurred in connection with the store consolidation plan; uncertainties regarding the ability to open new rent-to-own stores; the Company's ability to acquire additional rent-to-own stores on favorable terms; the Company's ability to identify and successfully enter new lines of business offering products and services that appeal to its customer demographic, including its financial services products; the Company's ability to enhance the performance of acquired stores; the Company's ability to control costs; the Company's ability to identify and successfully market products and services that appeal to its customer demographic; the Company's ability to enter into new and collect on its rental purchase agreements; the Company's ability to enter into new and collect on its short term loans; the passage of legislation adversely affecting the rent-to-own or financial services industries; interest rates; economic pressures affecting the disposable income available to the Company's targeted consumers, such as high fuel and utility costs; changes in the Company's stock price and the number of shares of common stock that it may or may not repurchase; changes in estimates relating to self-insurance liabilities and income tax and litigation reserves; changes in the Company's effective tax rate; the Company's ability to maintain an effective system of internal controls; changes in the number of share-based compensation grants, methods used to value future share-based payments and changes in estimated forfeiture rates with respect to share-based compensation; the resolution of the Company's litigation; the court hearing the Walker matter could refuse to approve the settlement or could require changes to the settlement that are unacceptable to the Company or the plaintiffs; the negotiation of and entry into definitive settlement documentation with respect to the prospective settlement of the Shafer/Johnson matter; one or more parties filing an objection to the prospective Shafer/Johnson settlement; a specified percentage of class members timely and validly opt out of the prospective Shafer/Johnson settlement; the court hearing the Shafer/Johnson matter could refuse to approve the prospective settlement or could require changes to the prospective settlement that are unacceptable to the Company or the plaintiffs; and the other risks detailed from time to time in our SEC reports, including but not limited to, the Company's annual report on Form 10-K for the year ended December 31, 2006, and its quarterly reports for the quarters ended March 31, 2007, June 30, 2007 and September 30, 2007. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, the Company is not obligated to publicly release any revisions to these forward-looking statements to reflect the events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.


                 Rent-A-Center, Inc. and Subsidiaries

                   STATEMENT OF EARNINGS HIGHLIGHTS


(In Thousands of Dollars,       Three Months Ended December 31,
 except per share data)
                          --------------------------------------------
                                 2007           2007
                          -------------- -------------- -------------
                             Before          After
                           Restructuring  Restructuring
                            Expense &      Expense &
                            Litigation     Litigation
                           Expense (Non-    Expense
                               GAAP)         (GAAP)
                          -------------- -------------- -------------

Total Revenue                 $  716,963     $  716,963
Operating Profit                  60,196         10,483    (1)(2)
Net Earnings                      28,071         (5,361)   (1)(2)
Diluted Earnings per
 Common Share                 $     0.42     $    (0.08)   (1)(2)
Adjusted EBITDA               $   82,679     $   82,679

Reconciliation to Adjusted
 EBITDA:

Earnings before income
 taxes                            38,254        (11,459)
Add back:
 Litigation expense                   --         11,000
 Refinancing expense                  --             --
 Restructuring expense                --         38,713
 Interest expense, net            21,942         21,942
 Depreciation of property
  assets                          18,674         18,674
 Amortization of
  intangibles                      3,809          3,809
                          -------------- -------------- -------------

Adjusted EBITDA               $   82,679     $   82,679



(In Thousands of Dollars,       Twelve Months Ended December 31,
 except per share data)
                          --------------------------------------------
                                 2007           2007
                          -------------- -------------- -------------
                          Before Royalty After Royalty
                             Payment,       Payment,
                            Litigation     Litigation
                            Expense, &     Expense, &
                           Restructuring  Restructuring
                           Expense (Non-    Expense
                               GAAP)         (GAAP)
                          -------------- -------------- -------------

Total Revenue                 $2,902,221     $2,906,121 (5)
Operating Profit                 301,300        204,237 (1)(2)(5)(6)
Net Earnings                     139,957         76,268 (1)(2)(5)(6)
Diluted Earnings per
 Common Share                 $     2.01     $     1.10 (1)(2)(5)(6)
Adjusted EBITDA               $  388,313     $  388,313

Reconciliation to Adjusted
 EBITDA:

Earnings before income
 taxes                           213,349        116,286
Add back:
 Litigation expense                   --         62,250
 Refinancing expense                  --             --
 Franchisees royalty
  payment                             --         (3,900)
 Restructuring expense                --         38,713
 Interest expense, net            87,951         87,951
 Depreciation of property
  assets                          71,279         71,279
 Amortization of
  intangibles                     15,734         15,734
                          -------------- -------------- -------------

Adjusted EBITDA               $  388,313     $  388,313


(In Thousands of Dollars,        Three Months Ended December 31,
 except per share data)
                            ------------------------------------------
                                  2006         2006
                            ------------- ------------ ---------------
                               Before        After
                              Litigation   Litigation
                              Expense &    Expense &
                              Refinancing  Refinancing
                               Expense      Expense
                              (Non-GAAP)     (GAAP)
                            ------------- ------------ ---------------

Total Revenue                  $  656,126   $  656,126
Operating Profit                   77,396       19,396
Net Earnings                       35,596       (2,320)    (3)(4)
Diluted Earnings per Common
 Share                         $     0.50   $    (0.03)    (3)(4)
Adjusted EBITDA                $   95,296   $   95,296

Reconciliation to Adjusted
 EBITDA:

Earnings before income taxes       59,845         (793)
Add back:
 Litigation expense                    --       58,000
 Refinancing expense                   --        2,638
 Restructuring expense                 --           --
 Interest expense, net             17,551       17,551
 Depreciation of property
  assets                           15,172       15,172
 Amortization of intangibles        2,728        2,728
                            ------------- ------------

Adjusted EBITDA                $   95,296   $   95,296



(In Thousands of Dollars,        Twelve Months Ended December 31,
 except per share data)
                            ------------------------------------------
                                  2006         2006
                            ------------- ------------ ---------------
                               Before        After
                              Litigation   Litigation
                              Expenses &   Expenses &
                              Refinancing  Refinancing
                               Expense      Expense
                              (Non-GAAP)     (GAAP)
                            ------------- ------------ ---------------

Total Revenue                  $2,433,908   $2,433,908
Operating Profit                  295,244      221,944
Net Earnings                      152,147      103,092 (3)(4)(7)(8)(9)
Diluted Earnings per Common
 Share                         $     2.15   $     1.46 (3)(4)(7)(8)(9)
Adjusted EBITDA                $  356,468   $  356,468

Reconciliation to Adjusted
 EBITDA:

Earnings before income taxes      242,241      164,138
Add back:
 Litigation expense                    --       73,300
 Refinancing expense                   --        4,803
 Franchisees royalty payment           --           --
 Restructuring expense                 --           --
 Interest expense, net             53,003       53,003
 Depreciation of property
  assets                           55,651       55,651
 Amortization of intangibles        5,573        5,573
                            ------------- ------------

Adjusted EBITDA                $  356,468   $  356,468

(1)  Includes the effects of a $38.7 million pre-tax restructuring
      expense in the fourth quarter of 2007 as part of the December 3,
      2007 announced store consolidation plan and other restructuring
      items. The restructuring expense reduced diluted earnings per
      share by approximately $0.39 in the fourth quarter of 2007 and
      $0.37 for the twelve month period ended December 31, 2007.

(2)  Includes the effects of a $11.0 million pre-tax expense in the
      fourth quarter of 2007 associated with the prospective
      settlement of the Shafer/Johnson matter. The expense reduced
      diluted earnings per share by approximately $0.11 in the fourth
      quarter of 2007 and $0.10 for the twelve month period ended
      December 31, 2007.

(3)  Includes the effects of a $58.0 million pre-tax expense in the
      fourth quarter of 2006 associated with the litigation expense
      with respect to the Perez matter. The expense reduced diluted
      earnings per share by approximately $0.51 in the fourth quarter
      of 2006 and $0.52 for the twelve month period ended December 31,
      2006.

(4)  Includes the effects of a $2.6 million pre-tax expense in the
      fourth quarter of 2006 for the refinancing of the Company's
      senior credit facility. This refinancing expense reduced diluted
      earnings per share by approximately $0.02 in both the fourth
      quarter of 2006 and for the twelve month period ended December
      31, 2006.

(5)  Includes the effects of $3.9 million in franchise royalty income
      in the third quarter of 2007 for the settlement agreement with
      five affiliated ColorTyme franchisees. The settlement payment
      increased diluted earnings per share by approximately $0.04 for
      the twelve month period ended December 31, 2007.

(6)  Includes the effects of a $51.3 million pre-tax litigation
      expense in the first quarter of 2007 associated with the
      settlement in the Perez matter. The expense reduced diluted
      earnings per share by approximately $0.48 for the twelve month
      period ended December 31, 2007.

(7)  Includes the effects of a $2.2 million pre-tax expense in the
      third quarter of 2006 to write off the remaining unamortized
      balance of financing costs from the Company's previous credit
      agreement. This refinancing expense reduced diluted earnings per
      share by approximately $0.02 in both the third quarter of 2006
      and for the twelve month period ended December 31, 2006.

(8)  Includes the effects of a $4.95 million pre-tax expense recorded
      in the third quarter of 2006 pursuant to the court approved
      settlement with the plaintiffs to resolve the Jeremy Burdusis,
      et al. v. Rent-A-Center, Inc., et al./Israel French, et al. v.
      Rent-A-Center, Inc. and Kris Corso, et al. v. Rent-A-Center,
      Inc. coordinated matters pending in state court in Los Angeles,
      California. The expense reduced diluted earnings per share by
      approximately $0.04 for the twelve month period ended December
      31, 2006.

(9)  Includes the effects of a $10.35 million pre-tax expense recorded
      in the third quarter of 2006 to account for the settlement costs
      and the Company's attorneys' fees associated with resolving the
      inquiry by the California Attorney General. The Company is in
      the process of finalizing the terms of the restitution program
      with the California Attorney General and expects to fund the
      restitution account as soon as reasonably practicable following
      the finalization of such terms. The Company also agreed to a
      civil penalty in the amount of $750,000, which was paid in the
      first quarter of 2007. The expense reduced diluted earnings per
      share by approximately $0.09 for the twelve month period ended
      December 31, 2006.

Selected Balance Sheet Data: (in Thousands   December 31, December 31,
 of Dollars)                                     2007         2006
                                             ------------ ------------

    Cash and cash equivalents                  $   97,375   $   92,344
    Prepaid expenses and other assets              56,384       54,068
    Rental merchandise, net
       On rent                                    735,672      816,762
       Held for rent                              202,298      239,471
    Total Assets                                2,626,943    2,740,956

    Senior debt                                   959,335      993,278
    Subordinated notes payable                    300,000      300,000
    Total Liabilities                           1,679,852    1,797,997
    Stockholders' Equity                          947,091      942,959
                 Rent-A-Center, Inc. and Subsidiaries

                 CONSOLIDATED STATEMENTS OF EARNINGS

(In Thousands of Dollars, except per share data)   Three Months Ended
                                                       December 31,
                                                   -------------------
                                                     2007      2006
                                                   --------- ---------
                                                        Unaudited

Store Revenue
   Rentals and Fees                                $640,720  $594,520
   Merchandise Sales                                 47,494    37,020
   Installment Sales                                  9,927     8,500
   Other                                              7,796     5,344
                                                   --------- ---------

                                                    705,937   645,384

Franchise Revenue
   Franchisee Merchandise Sales                       9,973     9,625
   Royalty Income and Fees                            1,053     1,117
                                                   --------- ---------

       Total Revenue                                716,963   656,126

Operating Expenses
   Direct Store Expenses
       Cost of Rentals and Fees                     144,798   131,944
       Cost of Merchandise Sold                      39,460    30,473
       Cost of Installment Sales                      3,774     3,669
       Salaries and Other Expenses                  424,830   373,174
       Franchise Cost of Merchandise Sold             9,511     9,203
                                                   --------- ---------

                                                    622,373   548,463

   General and Administrative Expenses               30,585    27,539
   Amortization of Intangibles                        3,809     2,728
   Litigation Expense                                11,000    58,000
   Restructuring Expense                             38,713        --
                                                   --------- ---------

       Total Operating Expenses                     706,480   636,730
                                                   --------- ---------

       Operating Profit                              10,483    19,396

Refinancing Expense                                      --     2,638
Interest Expense                                     23,832    18,913
Interest Income                                      (1,890)   (1,362)
                                                   --------- ---------

       Earnings before Income Taxes                 (11,459)     (793)

Income Tax Expense                                   (6,098)    1,527
                                                   --------- ---------

       NET EARNINGS                                  (5,361)   (2,320)

BASIC WEIGHTED AVERAGE SHARES                        66,779    70,095
                                                   ========= =========

BASIC EARNINGS PER COMMON SHARE                    $  (0.08) $  (0.03)
                                                   ========= =========

DILUTED WEIGHTED AVERAGE SHARES                      67,213    71,191
                                                   ========= =========

DILUTED EARNINGS PER COMMON SHARE                  $  (0.08) $  (0.03)
                                                   ========= =========

                 Rent-A-Center, Inc. and Subsidiaries

                 CONSOLIDATED STATEMENTS OF EARNINGS

(In Thousands of Dollars, except per share      Twelve Months Ended
 data)                                               December 31,
                                               -----------------------
                                                  2007        2006
                                               ----------- -----------
                                                      Unaudited

Store Revenue
   Rentals and Fees                            $2,594,061  $2,174,239
   Merchandise Sales                              208,989     175,954
   Installment Sales                               34,576      26,877
   Other                                           25,482      15,607
                                               ----------- -----------

                                                2,863,108   2,392,677

Franchise Revenue
   Franchisee Merchandise Sales                    34,229      36,377
   Royalty Income and Fees                          8,784       4,854
                                               ----------- -----------

       Total Revenue                            2,906,121   2,433,908

Operating Expenses
   Direct Store Expenses
       Cost of Rentals and Fees                   574,013     476,462
       Cost of Merchandise Sold                   156,503     131,428
       Cost of Installment Sales                   13,270      11,346
       Salaries and Other Expenses              1,684,965   1,385,437
       Franchise Cost of Merchandise Sold          32,733      34,862
                                               ----------- -----------

                                                2,461,484   2,039,535

   General and Administrative Expenses            123,703      93,556
   Amortization of Intangibles                     15,734       5,573
   Litigation Expense                              62,250      73,300
   Restructuring Expense                           38,713          --
                                               ----------- -----------

       Total Operating Expenses                 2,701,884   2,211,964
                                               ----------- -----------

       Operating Profit                           204,237     221,944

Refinancing Expense                                    --       4,803
Interest Expense                                   94,778      58,559
Interest Income                                    (6,827)     (5,556)
                                               ----------- -----------

       Earnings before Income Taxes               116,286     164,138

Income Tax Expense                                 40,018      61,046
                                               ----------- -----------

       NET EARNINGS                                76,268     103,092

BASIC WEIGHTED AVERAGE SHARES                      68,706      69,676
                                               =========== ===========

BASIC EARNINGS PER COMMON SHARE                $     1.11  $     1.48
                                               =========== ===========

DILUTED WEIGHTED AVERAGE SHARES                    69,475      70,733
                                               =========== ===========

DILUTED EARNINGS PER COMMON SHARE              $     1.10  $     1.46
                                               =========== ===========

CONTACT: Rent-A-Center, Inc.
David E. Carpenter, 972-801-1214
Vice President of Investor Relations
dcarpenter@racenter.com

SOURCE: Rent-A-Center, Inc.



Data provided by Nasdaq. Minimum 15 minutes delayed.
© 2007 Rent-A-Center® All Rights Reserved.