Rent-A-Center: Furniture - Appliances - Computers - Electronics
NASDAQ GS: RCII
$12.77(+0.19)
Jul 21, 2017 4:00 p.m.(20 minute delay)
Press Release

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Rent-A-Center, Inc. Reports Fourth Quarter and Year End 2005 Results; Reported Diluted Earnings per Share of $0.50, or $0.48 Excluding Non-recurring Items; Same Store Sales Improve; Cash Flow from Operations Exceeds $187 Million for the Year

PLANO, Texas, Feb 06, 2006 (BUSINESS WIRE) -- Rent-A-Center, Inc. (the "Company") (Nasdaq:RCII), the nation's largest rent-to-own operator, today announced revenues and net earnings for the quarter and year ended December 31, 2005.

Fourth Quarter 2005 Results

The Company reported total revenues for the quarter ended December 31, 2005 of $583.2 million, a $2.1 million decrease from $585.3 million for the same period in the prior year. This decrease of 0.4% in revenues was primarily driven by a decrease in same store sales of 0.2% plus the closing and merging of 114 stores with existing Rent-A-Center stores and the sale of 35 stores as part of the previously announced 162 store consolidation plan, offset by an increase in incremental revenues generated in new and acquired stores.

Net earnings for the quarter ended December 31, 2005 were $33.6 million, or $0.48 per diluted share, when excluding the expenses for restructuring and the impact of the hurricanes as well as the credit for the state tax reserve adjustment discussed below, representing a decrease of 12.7% from the $0.55 per diluted share, or net earnings of $41.7 million for the same period in the prior year, when excluding the one-time other income item discussed below. The decrease in net earnings per diluted share is primarily attributable to the decrease in same store sales as well as increases in operating expenses related to new store openings, acquisitions and normal operating costs such as utility and fuel costs, offset by a reduction in the number of the Company's outstanding shares.

Reported net earnings for the quarter ended December 31, 2005 were $35.1 million, or $0.50 per diluted share, when including the $0.02 effect of restructuring expenses, the $0.01 impact of the hurricane expenses and the $0.05 benefit from the credit for the state tax reserve adjustment, representing a decrease of 18.0% from the $0.61 per diluted share, or reported net earnings of $46.9 million for the same period in the prior year, when including the one-time other income item discussed below.

"We are pleased with the results for the fourth quarter, where we saw improvement in our same store sales trend and exceeded the high end of our expectations for diluted earnings per share," commented Mark E. Speese, the Company's Chairman and Chief Executive Officer. "In addition, we continue to generate significant cash flow from operations that we intend to utilize to enhance stockholder value by, among other things, adding approximately 5% annually to our rent-to-own store base, opening financial services centers in existing rent-to-own stores and repurchasing our outstanding common shares," Speese added.

Year End December 31, 2005 Results

Total reported revenues for the twelve months ended December 31, 2005 increased to $2.339 billion, a 1.1% increase from $2.313 billion for the same period in the prior year. Same store revenues for the twelve month period ending December 31, 2005 decreased 2.3%, compared to a decrease of 3.6% for the twelve month period ending December 31, 2004.

Net earnings for the twelve months ended December 31, 2005 were $141.9 million, or $1.91 per diluted share, when excluding the expenses for restructuring and the impact of the hurricanes as well as the credits for the state tax reserve adjustment, federal tax audit reserve, and litigation reversion discussed below, representing a decrease of 16.2% from the $2.28 per diluted share, or net earnings of $182.7 million for the same period in the prior year, when excluding the one-time other income item and litigation and finance charges discussed below.

Reported net earnings for the twelve months ended December 31, 2005 were $135.7 million, or $1.83 per diluted share, when including the $0.14 effect of restructuring expenses and the $0.09 impact of the hurricane expenses as well as $0.05 for the state tax reserve adjustment credit, $0.03 for the federal tax audit reserve credit, and $0.07 for the litigation reversion credit, representing a decrease of 5.7% from the $1.94 per diluted share, or reported net earnings of $155.9 million for the same period in the prior year, when including the one-time other income item and litigation and finance charges discussed below.

"Our 2005 earnings were negatively affected by the weakness in our same store sales, which we believe reflects, among other things, higher fuel and energy costs that ultimately suppressed customer demand, and also believe that product evolution, particularly in low end consumer electronics, placed additional pressure on our business," stated Mr. Speese. Mr. Speese added, "I am cautiously optimistic about 2006. Though the potential impact of continued rising fuel and energy costs remains a concern, we also believe we have reached a trough in the impact on our operations from the evolution of low end consumer electronics," Speese continued. "We will continue to focus on improving our store operations, including using our resources prudently and focusing on driving more customer traffic from our advertising initiatives."

Through the twelve month period ended December 31, 2005, the Company generated cash flow from operations of approximately $187.9 million, while ending the quarter with $57.6 million of cash on hand. On August 22, 2005, the Company announced that its Board of Directors increased the authorization for stock repurchases under the Company's common stock repurchase program to $400 million. During the twelve month period ended December 31, 2005, the Company repurchased 5,900,700 shares for $118.4 million in cash under the program and has utilized a total of $356.1 million of the total amount authorized by its Board of Directors since the inception of the plan.

Operations Highlights

During the fourth quarter of 2005, the Company opened 28 new rent-to-own store locations, acquired five stores as well as accounts from four additional locations, consolidated 18 stores into existing locations, sold 37 stores and closed five stores, for a net reduction of 27 stores. During the fourth quarter of 2005, the Company added financial services to 13 existing rent-to-own store locations, consolidated one store with financial services into an existing location and ended the year with a total of 40 stores providing these services.

Through the twelve month period ending December 31, 2005, the Company opened 67 new rent-to-own store locations, acquired 44 stores as well as accounts from 39 additional locations, consolidated 170 stores into existing locations, sold 43 stores and closed 13 stores, for a net reduction of 115 stores. Since January 1, 2006, the Company has opened four new rent-to-own store locations, acquired two stores as well as accounts from three additional locations, consolidated five stores into existing locations and sold one store. The Company has added financial services to three existing rent-to-own store locations since January 1, 2006.

2005 Store Consolidation Plan Expenses

During the fourth quarter of 2005, the Company recorded a pre-tax restructuring expense of approximately $2.1 million as part of the store consolidation plan announced on September 6, 2005. The costs with respect to these store closings relate primarily to lease terminations of approximately $2.8 million, fixed asset disposals of approximately $1.5 million and the proceeds from the sale of stores net of inventory costs of $2.3 million. This restructuring expense reduced diluted earnings per share in the fourth quarter of 2005 by $0.02.

For the third and fourth quarter of 2005 combined, the Company recorded pre-tax restructuring expenses of approximately $15.2 million as part of the store consolidation plan. The costs with respect to these store closings relate primarily to lease terminations of approximately $9.3 million, goodwill impairment of approximately $4.5 million, fixed asset disposals of approximately $3.3 million and the proceeds from the sale of stores net of inventory costs of $2.3 million. This restructuring expense reduced diluted earnings per share for the twelve month period ended December 31, 2005 by $0.14.

2005 Hurricane Related Expenses

During the fourth quarter of 2005, the Company recorded a pre-tax expense of approximately $1.1 million related to the damage caused by Hurricanes Katrina, Rita and Wilma. These costs relate primarily to inventory losses. This expense reduced diluted earnings per share in the fourth quarter of 2005 by $0.01.

For the third and fourth quarter of 2005 combined, the Company recorded pre-tax expenses of approximately $8.9 million related to the damage caused by Hurricanes Katrina, Rita and Wilma. These costs relate primarily to inventory losses of approximately $4.5 million and goodwill impairment of approximately $3.7 million. These expenses reduced diluted earnings per share for the twelve month period ended December 31, 2005 by $0.09.

2005 Tax Reserve Adjustment and Litigation Reversion Credits

During the fourth quarter of 2005, the Company recorded a $3.7 million state tax reserve credit for a reserve adjustment due to a change in estimate related to potential loss exposures. Also in 2005, the Company recorded a $2.0 million tax audit reserve credit in the second quarter associated with the examination and favorable resolution of the Company's 1998 and 1999 federal tax returns. In addition, the Company recorded an $8.0 million pre-tax credit in the first quarter associated with the settlement of the Griego/Carrillo litigation. The state tax reserve credit in the fourth quarter, the federal tax audit reserve credit in the second quarter and the litigation reversion credit in the first quarter increased diluted earnings per share for the twelve month period ended December 31, 2005 by $0.05, $0.03, and $0.07, respectively.

2004 Non-Recurring Items

During the fourth quarter of 2004, the Company recorded $7.9 million in one-time other income associated with the sale of charged-off accounts. This other income increased diluted earnings per share in the fourth quarter of 2004 by $0.06, from $0.55 per diluted earnings per share to the reported diluted earnings per share of $0.61. Additionally, this other income increased diluted earnings per share for the twelve month period ended December 31, 2004 by $0.06.

In addition, during 2004, the Company recorded $47.0 million in pre-tax charges in the third quarter associated with the settlement of the Griego/Carrillo litigation and $4.2 million in pre-tax charges associated with the refinancing of its senior credit facility. These charges reduced diluted earnings per share for the twelve month period ended December 31, 2004 by $0.40. These charges, combined with the $7.9 million in one-time other income in the fourth quarter, reduced diluted earnings per share for the twelve month period ended December 31, 2004 by $0.34 to the reported diluted earnings per share of $1.94.

Rent-A-Center will host a conference call to discuss the fourth quarter and year end financial results on Tuesday morning, February 7, 2006, 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 2,760 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 294 rent-to-own stores, 285 of which operate under the trade name of "ColorTyme," and the remaining nine of which operate under the "Rent-A-Center" name.

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, expenses to be incurred in connection with the store consolidation plan, or the potential impact of acquisitions that may be completed after February 6, 2006.

FIRST QUARTER 2006 GUIDANCE:

Revenues

  • The Company expects total revenues to be in the range of $591 million to $599 million.


  • Store rental and fee revenues are expected to be between $509 million and $515 million.


  • Total store revenues are expected to be in the range of $579 million to $587 million.


  • Same store sales are expected to be flat to slightly positive.


  • The Company expects to open 5-15 new rent-to-own store locations.


  • The Company expects to add financial services to 10-15 rent-to-own store locations.

Expenses

  • The Company expects cost of rental and fees to be between 21.6% and 22.0% of store rental and fee revenue and cost of goods merchandise sales to be between 65% and 70% of store merchandise sales.


  • Store salaries and other expenses are expected to be in the range of 57.3% to 58.8% of total store revenue.


  • General and administrative expenses are expected to be between 3.5% and 3.7% of total revenue.


  • Net interest expense is expected to be approximately $12.0 million, depreciation of property assets to be approximately $13.0 million and amortization of intangibles is expected to be approximately $1.0 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 $0.48 to $0.52, including stock option expense.


  • Diluted shares outstanding are estimated to be between 69.7 million and 70.7 million.

FISCAL 2006 GUIDANCE:

Revenues

  • The Company expects total revenues to be in the range of $2.33 billion and $2.36 billion.


  • Store rental and fee revenues are expected to be between $2.080 billion and $2.105 billion.


  • Total store revenues are expected to be in the range of $2.294 billion and $2.324 billion.


  • Same store sales are expected to be flat to slightly positive.


  • The Company expects to open 60-80 new store locations.


  • The Company expects to add financial services to 100-160 rent-to-own store locations.

Expenses

  • The Company expects cost of rental and fees to be between 21.5% and 21.9% of store rental and fee revenue and cost of goods merchandise sales to be between 70% and 75% of store merchandise sales.


  • Store salaries and other expenses are expected to be in the range of 58.0% to 59.5% of total store revenue.


  • General and administrative expenses are expected to be between 3.6% and 3.8% of total revenue.


  • Net interest expense is expected to be between $42.0 million and $47.0 million, depreciation of property assets is expected to be between $52.0 million and $57.0 million and amortization of intangibles is expected to be approximately $3.5 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 $2.00 to $2.10, including stock option expense.


  • Diluted shares outstanding are estimated to be between 70.0 million and 71.5 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 enhance the performance of these acquired stores; the Company's ability to control store level costs; the Company's ability to identify and successfully market products and services that appeal to our customer demographic; the Company's ability to identify and successfully enter new lines of business offering products and services that appeal to our customer demographic; the results of the Company's litigation; the passage of legislation adversely affecting the rent-to-own or financial services industry; interest rates; the Company's ability to collect on its rental purchase agreements; the Company's ability to enter into new rental purchase agreements; economic pressures affecting the disposable income available to our targeted consumers, such as high fuel and utility costs; changes in the Company's effective tax rate; changes in the Company's stock price and the number of shares of common stock that the Company may or may not repurchase; and the other risks detailed from time to time in the Company's SEC filings, including but not limited to, its annual report on Form 10-K for the year ended December 31, 2004 and its quarterly reports on Form 10-Q for the three month period ended March 31, 2005, the Form 10-Q for the six month period ended June 30, 2005 and the Form 10-Q for the nine month period ended September 30, 2005. 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, except per share data)

                               Three Months Ended December 31,
                             -----------------------------------
                                   2005              2005
                             ----------------- -----------------

                                Excluding         Including
                               Restructuring     Restructuring
                               and Hurricane     and Hurricane
                               Expenses and      Expenses and
                                 State Tax         State Tax
                               Reserve Credit    Reserve Credit
                             ----------------- -----------------

Total Revenue                        $583,213          $583,213
Operating Profit                       63,073            59,811
Net Earnings                           33,596            35,050 (1)
Diluted Earnings per Common
 Share                                  $0.48             $0.50 (1)
Adjusted EBITDA                       $77,764           $77,764

Reconciliation to Adjusted
 EBITDA:

Earnings before income taxes           51,742            48,480
Add back:
    Restructuring expense                  --             2,138
    Hurricane expense impact               --             1,124
    Other income - sale of
     charged-off accounts                  --                --
    Interest expense, net              11,331            11,331
    Depreciation of property
     assets                            13,364            13,364
    Amortization of
     intangibles                        1,327             1,327
                             ----------------- -----------------

Adjusted EBITDA                       $77,764           $77,764


                               Three Months Ended December 31,
                             ------------------------------------
                                    2004              2004
                             ----------------- -----------------

                              Excluding Sale    Including Sale of
                              of Charged-Off       Charged-Off
                                  Accounts          Accounts
                              ----------------- -----------------

Total Revenue                        $585,283          $585,283
Operating Profit                       75,725            75,725
Net Earnings                           41,714            46,879 (2)
Diluted Earnings per Common
 Share                                  $0.55             $0.61 (2)
Adjusted EBITDA                       $91,078           $91,078

Reconciliation to Adjusted
 EBITDA:

Earnings before income taxes           66,545            74,469
Add back:
    Restructuring expense                  --                --
    Hurricane expense impact               --                --
    Other income - sale of
     charged-off accounts                  --            (7,924)
    Interest expense, net               9,180             9,180
    Depreciation of property
     assets                            12,975            12,975
    Amortization of
     intangibles                        2,378             2,378
                             ----------------- -----------------

Adjusted EBITDA                       $91,078           $91,078



                              Twelve Months Ended December 31,
                             -----------------------------------
                                   2005              2005
                             ----------------- -----------------
                                Excluding         Including
                               Restructuring     Restructuring
                               and Hurricane     and Hurricane
                              Expenses & Tax    Expenses & Tax
                              Audit Reserve,    Audit Reserve,
                                 State Tax         State Tax
                                Reserve and       Reserve and
                                Litigation        Litigation
                                  Credits           Credits
                             ----------------- -----------------

Total Revenue                      $2,339,107        $2,339,107
Operating Profit                      265,803           249,771
Net Earnings                          141,886           135,738 (3,4)
Diluted Earnings per Common
 Share                                  $1.91             $1.83 (3,4)
Adjusted EBITDA                      $327,223          $327,223

Reconciliation to Adjusted
 EBITDA:

Earnings before income taxes          225,100           209,068
Add back:
    Restructuring expense                  --            15,166
    Hurricane expense impact               --             5,199
    Litigation (reversion)
     settlement                            --            (8,000)
    Finance charge from
     recapitalization                      --                --
    Other income - sale of
     charged-off accounts                  --                --
    Interest expense, net              40,703            40,703
    Depreciation of property
     assets                            53,382            53,382
    Amortization of
     intangibles                        8,038            11,705 (6)
                             ----------------- -----------------

Adjusted EBITDA                      $327,223          $327,223



                              Twelve Months Ended December 31,
                            ------------------------------------
                                   2004              2004
                             ----------------- -----------------
                             Excluding Sale     Including Sale
                              of Charged-Off     of Charged-Off
                                 Accounts,         Accounts,
                               Litigation &      Litigation &
                              Finance Charges   Finance Charges
                             ----------------- -----------------

Total Revenue                      $2,313,255        $2,313,255
Operating Profit                      329,951           282,951
Net Earnings                          182,669           155,855 (5)
Diluted Earnings per Common
 Share                                  $2.28             $1.94 (5)
Adjusted EBITDA                      $389,297          $389,297

Reconciliation to Adjusted
 EBITDA:

Earnings before income taxes          294,628           251,379
Add back:
    Restructuring expense                  --                --
    Hurricane expense impact               --                --
    Litigation (reversion)
     settlement                            --            47,000
    Finance charge from
     recapitalization                      --             4,173
    Other income - sale of
     charged-off accounts                  --            (7,924)
    Interest expense, net              35,323            35,323
    Depreciation of property
     assets                            48,566            48,566
    Amortization of
     intangibles                       10,780            10,780
                             ----------------- -----------------

Adjusted EBITDA                      $389,297          $389,297

    (1) Including the effects of a $2.1 million pre-tax restructuring
        expense as part of the store consolidation plan announced
        September 6, 2005, $1.1 million in pre-tax expenses related to
        the damage caused by Hurricanes Katrina, Rita and Wilma, and a
        $3.7 million state tax reserve credit for a reserve
        adjustment. The expenses reduced diluted earnings per share in
        the fourth quarter of 2005 by $0.02 for the restructuring
        expense, and by $0.01 for the hurricane expenses, while the
        state tax reserve credit increased diluted earnings per share
        by $0.05.

    (2) Including the effects of $7.9 million in one-time other income
        associated with the sale of charged-off accounts. This other
        income increased diluted earnings per share in the fourth
        quarter of 2004 and for the twelve month period ended December
        31, 2004 by $0.06.

    (3) Including the effects of a $15.2 million pre-tax restructuring
        expense as part of the store consolidation plan announced
        September 6, 2005, $8.9 million in pre-tax expenses related to
        the damage caused by Hurricanes Katrina, Rita and Wilma, and a
        $3.7 million state tax reserve credit for a reserve
        adjustment. The expenses reduced diluted earnings per share
        for the twelve month period ending December 31, 2005 by $0.14
        for the restructuring expense, and by $0.09 for the hurricane
        expenses, while the state tax reserve credit increased diluted
        earnings per share by $0.05.

    (4) Including the effects of an $8.0 million pre-tax credit in the
        first quarter associated with the settlement of the
        Griego/Carrillo litigation reversion, and a $2.0 million tax
        audit reserve credit associated with the examination and
        favorable resolution of the Company's 1998 and 1999 federal
        tax returns in the second quarter of 2005. These credits
        increased diluted earnings per share for the twelve month
        period ended December 31, 2005 by $0.10.

    (5) Including the effects of $47.0 million in pre-tax charges
        associated with the Griego/Carrillo litigation and $4.2
        million in pre-tax charges associated with refinancing of the
        Company's senior credit facility, both in the third quarter.
        These charges reduced diluted earnings per share for the
        twelve month period ended December 31, 2004 by $0.40. These
        charges, combined with the $7.9 million in one-time other
        income in the fourth quarter, reduced diluted earnings per
        share for the twelve month period ended December 31, 2004 by
        $0.34 to the reported diluted earnings per share of $1.94.

    (6) Includes $3.667 million of goodwill impairment related to
        Hurricanes Katrina, Rita and Wilma in the third quarter.
Selected Balance Sheet Data:
  (in Thousands of Dollars)     December 31, 2005   December 31, 2004
                                -----------------   -----------------

   Cash and cash equivalents      $   57,627          $   58,825
   Prepaid expenses and other
    assets                            38,523              65,050
   Rental merchandise, net
             On rent                 588,978             596,447
             Held for rent           161,702             162,664
   Total Assets                    1,948,664           1,967,788

   Senior debt                       424,050             408,250
   Subordinated notes payable        300,000             300,000
   Total Liabilities               1,125,232           1,173,517
   Stockholders' Equity              823,431             794,271
CONSOLIDATED STATEMENTS OF EARNINGS

(In Thousands of Dollars, except per
 share data)                          Three Months Ended December 31,
                                      -------------------------------
                                           2005             2004
                                      ---------------   -------------
                                                 Unaudited

Store Revenue
   Rentals and Fees                         $523,063        $530,407
   Merchandise Sales                          37,812          36,307
   Installment Sales                           6,565           6,336
   Other                                       2,890             602
                                      ---------------   -------------
                                             570,330         573,652

Franchise Revenue
   Franchise Merchandise Sales                11,762          10,299
   Royalty Income and Fees                     1,121           1,332
                                      ---------------   -------------
       Total Revenue                         583,213         585,283

Operating Expenses
   Direct Store Expenses
       Cost of Rentals and Fees              113,873         116,167
       Cost of Merchandise Sold               29,018          28,017
       Cost of Installment Sales               2,720           2,710
       Salaries and Other Expenses           341,391         331,374
   Franchise Operation Expenses
       Cost of Franchise Merchandise
        Sales                                 11,326           9,781
                                      ---------------   -------------
                                             498,328         488,049


   General and Administrative Expenses        21,609          19,131
   Amortization of Intangibles                 1,327           2,378
   Restructuring charge                        2,138              --
   Class Action Litigation (Reversion)
    Settlement                                    --              --
                                      ---------------   -------------

       Total Operating Expenses              523,402         509,558
                                      ---------------   -------------

       Operating Profit                       59,811          75,725

Other Income - Sale of Charged-Off
 Accounts                                         --          (7,924)
Interest Income                               (1,408)         (1,255)
Interest Expense                              12,739          10,435
                                      ---------------   -------------

       Earnings before Income Taxes           48,480          74,469

Income Tax Expense                            13,430          27,590
                                      ---------------   -------------

       NET EARNINGS                           35,050          46,879

Preferred Dividends                               --              --
                                      ---------------   -------------

Net earnings allocable to common
 stockholders                                $35,050         $46,879
                                      ===============   =============

BASIC WEIGHTED AVERAGE SHARES                 69,942          74,863
                                      ===============   =============

BASIC EARNINGS PER COMMON SHARE                $0.50           $0.63
                                      ===============   =============

DILUTED WEIGHTED AVERAGE SHARES               70,647          76,427
                                      ===============   =============

DILUTED EARNINGS PER COMMON SHARE              $0.50           $0.61
                                      ===============   =============
Rent-A-Center, Inc. and Subsidiaries

                  CONSOLIDATED STATEMENTS OF EARNINGS

(In Thousands of Dollars, except per
 share data)                          Twelve Months Ended December 31,
                                      --------------------------------
                                             2005             2004
                                      ---------------- ---------------
                                                 Unaudited

Store Revenue
   Rentals and Fees                        $2,084,757      $2,071,866
   Merchandise Sales                          177,292         166,594
   Installment Sales                           26,139          24,304
   Other                                        7,903           3,568
                                      ---------------- ---------------
                                            2,296,091       2,266,332

Franchise Revenue
   Franchise Merchandise Sales                 37,794          41,398
   Royalty Income and Fees                      5,222           5,525
                                      ---------------- ---------------
       Total Revenue                        2,339,107       2,313,255

Operating Expenses
   Direct Store Expenses
       Cost of Rentals and Fees               452,583         450,035
       Cost of Merchandise Sold               129,624         119,098
       Cost of Installment Sales               10,889          10,512
       Salaries and Other Expenses          1,358,760       1,277,926
   Franchise Operation Expenses
       Cost of Franchise Merchandise
        Sales                                  36,319          39,472
                                      ---------------- ---------------
                                            1,988,175       1,897,043


   General and Administrative Expenses         82,290          75,481
   Amortization of Intangibles                 11,705          10,780
   Restructuring charge                        15,166              --
   Class Action Litigation (Reversion)
    Settlement                                 (8,000)         47,000
                                      ---------------- ---------------

       Total Operating Expenses             2,089,336       2,030,304
                                      ---------------- ---------------

       Operating Profit                       249,771         282,951

Finance Charge from Recapitalization               --           4,173
Other Income - Sale of Charged-Off
 Accounts                                          --          (7,924)
Interest Income                                (5,492)         (5,637)
Interest Expense                               46,195          40,960
                                      ---------------- ---------------

       Earnings before Income Taxes           209,068         251,379

Income Tax Expense                             73,330          95,524
                                      ---------------- ---------------

                NET EARNINGS                  135,738         155,855

Preferred Dividends                                --              --
                                      ---------------- ---------------

Net earnings allocable to common
 stockholders                                $135,738        $155,855
                                      ================ ===============

BASIC WEIGHTED AVERAGE SHARES                  73,018          78,150
                                      ================ ===============

BASIC EARNINGS PER COMMON SHARE                 $1.86           $1.99
                                      ================ ===============

DILUTED WEIGHTED AVERAGE SHARES                74,108          80,247
                                      ================ ===============

DILUTED EARNINGS PER COMMON SHARE               $1.83           $1.94
                                      ================ ===============

SOURCE: Rent-A-Center, Inc.

Rent-A-Center, Inc., Plano
David E. Carpenter, 972-801-1214
dcarpenter@racenter.com



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