Rent-A-Center: Furniture - Appliances - Computers - Electronics
NASDAQ GS: RCII
$12.77(+0.19)
Jul 21, 2017 4:00 p.m.(20 minute delay)
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Rent-A-Center, Inc. Reports Third Quarter 2006 Results

Reported Diluted Earnings per Share of $0.36, or $0.51 Excluding Non-recurring Items

PLANO, Texas--(BUSINESS WIRE)--Oct. 30, 2006--Rent-A-Center, Inc. (the "Company") (NASDAQ/NGS:RCII), the nation's largest rent-to-own operator, today announced revenues and net earnings for the quarter ended September 30, 2006.

Third Quarter 2006 Results

The Company reported total revenues for the quarter ended September 30, 2006 of $587.2 million, a $13.7 million increase from $573.5 million for the same period in the prior year. This increase of 2.4% in revenues was primarily driven by a 3.6% increase in same store sales plus an increase in incremental revenues generated in new and acquired stores, offset by the revenue lost from stores that were closed or sold during the previous twelve months.

Reported net earnings for the quarter ended September 30, 2006 were $25.2 million, or $0.36 per diluted share, when including the $0.02 per share effect of refinancing expenses and the $0.13 per share for litigation expenses discussed below. This represents an increase of $0.21 per diluted share from the $0.15 per diluted share, or reported net earnings of $11.3 million for the same period in the prior year, when including the $0.20 per share effect of restructuring expenses and the impact of the hurricanes discussed below.

Net earnings for the quarter ended September 30, 2006 were $36.4 million, or $0.51 per diluted share, when excluding the expenses for refinancing and litigation discussed below. This represents an increase of 45.7% from the $0.35 per diluted share, or net earnings of $26.0 million for the same period in the prior year, when excluding the expenses for restructuring and the impact of the hurricanes discussed below. The increase in net earnings per diluted share is primarily attributable to the increase in same store sales, the reduction in operating costs due to a lower store count as well as a reduction in the number of the Company's outstanding shares.

"We continue to execute on our business model as exemplified by our third consecutive positive same store sales quarter," commented Mark E. Speese, the Company's Chairman and Chief Executive Officer. "Our same store sales increased 3.6% for the quarter, which is primarily related to changes in our promotional activities as well as an increase in the number of units on rent," Speese continued. "We were able to deliver on our expectations this quarter and believe we are well positioned in our core business as we approach the closing and integration of the Rent-Way acquisition," Speese stated.

Nine Months Ended September 30, 2006 Results

Total reported revenues for the nine months ended September 30, 2006 increased to $1.778 billion, a 1.2% increase from $1.756 billion for the same period in the prior year. Same store revenues for the nine month period ending September 30, 2006 increased 2.1%.

Reported net earnings for the nine months ended September 30, 2006 were $105.4 million, or $1.49 per diluted share, when including the $0.02 per share effect of refinancing expenses and $0.14 per share for litigation expenses discussed below. This represents an increase of 11.2% from the $1.34 per diluted share, or reported net earnings of $100.7 million for the same period in the prior year, when including the $0.12 per share effect of restructuring expenses and the $0.08 per share impact of the hurricane expenses, as well as the $0.03 per share benefit for the federal tax audit reserve credit and the $0.07 per share benefit for the litigation reversion credit discussed below.

Net earnings for the nine months ended September 30, 2006 were $116.6 million, or $1.65 per diluted share, when excluding the expenses for refinancing and litigation discussed below. This represents an increase of 14.6% from the $1.44 per diluted share, or net earnings of $108.3 million for the same period in the prior year, when excluding the restructuring expenses, the impact of the hurricanes as well as the credits for the federal tax audit reserve and litigation reversion discussed below.

Through the nine month period ended September 30, 2006, the Company generated cash flow from operations of approximately $131.3 million, while ending the quarter with $53.7 million of cash on hand. During the nine month period ended September 30, 2006, the Company repurchased 202,800 shares of its common stock for $4.7 million in cash under its common stock repurchase program and has utilized a total of $360.8 million of the $400.0 million authorized by its Board of Directors since the inception of the plan. In addition, during the nine month period ended September 30, 2006, the Company has reduced its outstanding indebtedness by approximately $65.6 million.

Operations Highlights

During the third quarter of 2006, the Company opened 9 new rent-to-own store locations, acquired 10 stores as well as accounts from 15 additional locations and consolidated 17 stores into existing locations, for a net addition of two stores and an ending balance of 2,751 stores. During the third quarter of 2006, the Company added financial services to 25 existing rent-to-own store locations, closed one location and ended the quarter with a total of 101 stores providing these services.

Through the nine month period ended September 30, 2006, the Company opened 28 new rent-to-own store locations, acquired 28 stores as well as accounts from 35 additional locations, consolidated 50 stores into existing locations, and sold 15 stores, for a net reduction of nine stores. Through the nine month period ending September 30, 2006, the Company added financial services to 63 existing rent-to-own store locations, consolidated one store with financial services into an existing location and closed one location, for a net addition of 61 stores providing these services.

Since September 30, 2006, the Company has opened two new rent-to-own store locations. The Company has added financial services to 22 existing rent-to-own store locations since September 30, 2006.

2006 Non-recurring Items

2006 Senior Credit Facility Refinancing Expense. 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. This refinancing expense reduced diluted earnings per share by approximately $0.02 in both the third quarter of 2006 and for the nine month period ended September 30, 2006.

2006 Litigation Expense

Burdusis/French/Corso. As previously announced on August 10, 2006, the Company has reached a prospective 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. 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 $4.95 million in cash, including plaintiff's attorneys' fees, to be distributed to an agreed-upon class of Company employees from August 1998 through the date of preliminary court approval of the settlement. In connection with the prospective settlement, the Company is not admitting liability for its wage and hour practices in California. A hearing on a motion for preliminary approval of the settlement is currently scheduled for November 9, 2006. The Company recorded a pre-tax expense of $4.95 million in the third quarter of 2006 to account for the aforementioned settlement amount and attorneys' fees. The litigation expense with respect to the Burdusis/French/Corso prospective settlement reduced diluted earnings per share by approximately $0.04 in the third quarter of 2006 and by approximately $0.05 for the nine month period ended September 30, 2006.

California Attorney General. The Company also announced today that it has reached a prospective 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. Under the terms contemplated, the Company expects to create a restitution fund in the amount of approximately $9.6 million in cash, to be distributed to certain groups of customers (1) who entered into rental purchase agreements and acquired ownership of property under those rental purchase agreements between November 1, 2004 and the date of approval of the settlement, (2) who entered into rental purchase agreements after November 1, 2004 that are still ongoing after the date of approval of the settlement, or (3) who purchased new memberships in the Rent-A-Center Preferred Customer Club between November 1, 2004 and the date of the approval of the settlement. Restitution checks will contain a restrictive endorsement releasing the Company from claims that arise from or relate to the cash price set forth in the rental purchase agreement and the customer's purchase of the Preferred Customer Club. The Company also expects to enter into an injunction (i) limiting the cash price, total of payments and purchase option price in future rental purchase agreements to the specified limits on prices set forth in the recent amendment to the Karnette Rental-Purchase Act, which amendment became effective as of September 22, 2006, and (ii) governing certain business practices with respect to the Company's club program. In addition, the Company anticipates causing the reserve amount in the Griego settlement fund to be paid to the Attorney General. Finally, the Company expects to agree to a civil penalty in the amount of $750,000. Under the terms of the prospective settlement, any unclaimed restitution funds at the conclusion of the restitution period will be paid to the Attorney General, and made available for a limited period of time to resolve any similar claims filed against the Company by its customers. In connection with the prospective settlement, the Company is not admitting liability for its past business practices in California. To account for the aforementioned costs, as well as the Company's attorneys' fees, the Company recorded a pre-tax charge of $10.4 million in the third quarter of 2006. The litigation expense with respect to the California Attorney General prospective settlement reduced diluted earnings per share by approximately $0.09 in both the third quarter of 2006 and for the nine month period ended September 30, 2006.

The terms of the prospective settlements of the Burdusis/French/Corso and California Attorney General matters are subject to the applicable parties entering into definitive settlement agreements and obtaining court approval. While the Company believes that the terms of these prospective settlements are fair, there can be no assurance that the settlements, if completed, will be approved by the applicable court in their present form.

2005 Non-recurring Items

2005 Store Consolidation Plan Expense. During the third quarter of 2005, the Company recorded a pre-tax restructuring expense of approximately $13.0 million as part of the store consolidation plan announced on September 6, 2005. This restructuring expense reduced diluted earnings per share by approximately $0.12 in both the third quarter of 2005 and for the nine month period ended September 30, 2005.

2005 Hurricane Related Expense. During the third quarter of 2005, the Company also recorded a pre-tax expense of approximately $7.7 million related to the damage caused by Hurricanes Katrina and Rita. This expense reduced diluted earnings per share by approximately $0.08 in both the third quarter of 2005 and for the nine month period ended September 30, 2005.

2005 Federal Tax Audit Reserve Credit. During the second quarter of 2005, the Company recorded 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. The tax audit reserve credit increased diluted earnings per share for the nine month period ended September 30, 2005 by approximately $0.03.

2005 Litigation Reversion Credit. During the first quarter of 2005, the Company recorded an $8.0 million pre-tax credit associated with the settlement of the Griego/Carrillo litigation. This pre-tax litigation reversion credit increased diluted earnings per share for the nine month period ended September 30, 2005 by approximately $0.07.

Rent-A-Center will host a conference call to discuss the third quarter results on Tuesday morning, October 31, 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 2,753 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 280 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, a non-cash charge in the fourth quarter to write off the remaining unamortized balance of financing costs from our current credit agreement in connection with the anticipated refinancing related to the potential acquisition of Rent-Way, Inc., or the potential impact of acquisitions, including the potential acquisition of Rent-Way, Inc., or dispositions that may be completed after October 30, 2006.

FOURTH QUARTER 2006 GUIDANCE (DOES NOT INCLUDE POTENTIAL RENT-WAY, INC. ACQUISITION):

Revenues

  • The Company expects total revenues to be in the range of $586 million to $594 million.


  • Store rental and fee revenues are expected to be between $526 million and $532 million.


  • Total store revenues are expected to be in the range of $574 million to $582 million.


  • Same store sales are expected to be in the flat to 1.0% range.


  • The Company expects to open 5-10 new rent-to-own store locations.


  • The Company expects to add financial services to 45-55 rent-to-own store locations.

Expenses

  • The Company expects cost of rental and fees to be between 21.7% and 22.1% of store rental and fee revenue and cost of merchandise sold to be between 73% and 78% of store merchandise sales.


  • Store salaries and other expenses are expected to be in the range of 58.5% to 60.0% 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 approximately $12.0 million, depreciation of property assets to be approximately $13.5 million and amortization of intangibles is expected to be approximately $1.0 million.


  • The effective tax rate is expected to be approximately 36.5% of pre-tax income.


  • Diluted earnings per share are estimated to be in the range of $0.46 to $0.50.


  • Diluted shares outstanding are estimated to be between 70.7 million and 71.7 million.

FISCAL 2007 GUIDANCE (DOES NOT INCLUDE POTENTIAL RENT-WAY, INC. ACQUISITION):

Revenues

  • The Company expects total revenues to be in the range of $2.420 billion and $2.450 billion.


  • Store rental and fee revenues are expected to be between $2.134 billion and $2.159 billion.


  • Total store revenues are expected to be in the range of $2.379 billion and $2.409 billion.


  • Same store sales are expected to be in the 1.0% to 2.0% range.


  • The Company expects to open 25-35 new store locations.


  • The Company expects to add financial services to 200-250 rent-to-own store locations.

Expenses

  • The Company expects cost of rental and fees to be between 21.7% and 22.1% of store rental and fee revenue and cost of merchandise sold 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 $44.0 million and $48.0 million, depreciation of property assets is expected to be between $54.0 million and $58.0 million and amortization of intangibles is expected to be approximately $2.0 million.


  • The effective tax rate is expected to be approximately 36.5% of pre-tax income.


  • Diluted earnings per share are estimated to be in the range of $2.24 to $2.32.


  • Diluted shares outstanding are estimated to be between 71.5 million and 73.0 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 the Company's 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 the Company's customer demographic; the Company's ability to identify and successfully enter into new lines of business offering products and services that appeal to the Company's customer demographic, including the Company's financial services products; the results of the Company's litigation; the passage of legislation adversely affecting the rent-to-own or financial services industries; interest rates; the Company's ability to enter into new and collect on the Company's rental purchase agreements; the Company's ability to enter into new and collect on the Company's short term loans; economic pressures affecting the disposable income available to the Company's targeted consumers, such as high fuel and utility costs; changes in estimates with respect to self insurance liabilities and income tax 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; changes in the Company's stock price and the number of shares of common stock that we may or may not repurchase; changes in our debt ratings; the negotiation of and entry into definitive settlement documentation with respect to the prospective settlements; one or more parties filing an objection to the prospective settlements; the courts could refuse to approve the prospective settlements or could require changes to the prospective settlements that are unacceptable to the Company or the plaintiffs; the approval of the proposed merger with Rent-Way, Inc. by the shareholders of Rent-Way; the ability of the Company to successfully integrate the Rent-Way stores into the Company's operating system; the Company's ability to enhance the performance of the acquired Rent-Way stores; the ability of the parties to close the Rent-Way acquisition in the time period currently anticipated; the satisfaction of the closing conditions to the Rent-Way acquisition; the Company's ability to realize the cost savings anticipated in connection with the Rent-Way acquisition; the Company's ability to obtain acceptable financing of the proposed Rent-Way acquisition; and other risks detailed from time to time in the Company's SEC reports, including but not limited to, the Company's annual report on Form 10-K for the year ended December 31, 2005 and its quarterly reports on Form 10-Q for the quarter ended March 31, 2006 and June 30, 2006. 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 September
                                                   30,
                                     ------------------------------
                                        2006         2006
                                     ------------ ------------
                                     Before Legal After Legal
                                      Settlement   Settlement
                                          &            &
                                      Refinancing  Refinancing
                                        Charges      Charges
                                     ------------ ------------

Total Revenue                           $587,184     $587,184
Operating Profit                          67,171       51,871
Net Earnings                              36,380       25,241 (1,2,3)
Diluted Earnings per Common Share          $0.51        $0.36 (1,2,3)
Adjusted EBITDA                          $81,666      $81,666

Reconciliation to Adjusted EBITDA:

Earnings before income taxes              55,184       37,719
Add back:
  Restructuring expense                       --           --
  Hurricanes expense                          --           --
  Litigation settlement                       --       15,300
  Finance charges from refinancing            --        2,165
  Interest expense, net                   11,987       11,987
  Depreciation of property assets         13,486       13,486
  Amortization of intangibles              1,009        1,009
                                     ------------ ------------

Adjusted EBITDA                          $81,666      $81,666

                                     Three Months Ended September
                                                   30,
                                     ------------------------------
                                          2005           2005
                                     --------------- --------------
                                         Before          After
                                       Restructuring  Restructuring
                                           and            and
                                        Hurricanes     Hurricanes
                                          Expense        Expense
                                     --------------- --------------

Total Revenue                              $573,507       $573,507
Operating Profit                             51,750         30,980
Net Earnings                                 25,985         11,277 (4)
Diluted Earnings per Common Share             $0.35          $0.15 (4)
Adjusted EBITDA                             $67,493        $67,493

Reconciliation to Adjusted EBITDA:

Earnings before income taxes                 41,279         20,509
Add back:
  Restructuring expense                          --         13,028
  Hurricanes expense                             --          4,075
  Litigation settlement                          --             --
  Finance charges from refinancing               --             --
  Interest expense, net                      10,471         10,471
  Depreciation of property assets            13,484         13,484
  Amortization of intangibles                 2,259          5,926 (6)
                                     --------------- --------------

Adjusted EBITDA                             $67,493        $67,493


                                      Nine Months Ended September
                                                   30,
                                     ------------------------------
                                        2006         2006
                                     ------------ ------------
                                     Before Legal After Legal
                                      Settlement   Settlement
                                          &            &
                                      Refinancing  Refinancing
                                        Charges      Charges
                                     ------------ ------------

Total Revenue                         $1,777,782   $1,777,782
Operating Profit                         217,848      202,548
Net Earnings                             116,551      105,412 (1,2,3)
Diluted Earnings per Common Share          $1.65        $1.49 (1,2,3)
Adjusted EBITDA                         $261,172     $261,172

Reconciliation to Adjusted EBITDA:

Earnings before income taxes             182,396      164,931
Add back:
  Restructuring expense                       --           --
  Hurricanes expense impact                   --           --
  Litigation credit & settlement              --       15,300
  Finance charges from refinancing            --        2,165
  Interest expense, net                   35,452       35,452
  Depreciation of property assets         40,479       40,479
  Amortization of intangibles              2,845        2,845
                                     ------------ ------------

Adjusted EBITDA                         $261,172     $261,172


                                    Nine Months Ended September
                                                 30,
                                   ------------------------------
                                        2005           2005
                                   --------------- --------------
                                       Before          After
                                     Restructuring  Restructuring
                                         and            and
                                      Hurricanes     Hurricanes
                                     Expense & Tax  Expense & Tax
                                     Audit Reserve  Audit Reserve
                                         and            and
                                      Litigation     Litigation
                                        Credits        Credits
                                   --------------- --------------

Total Revenue                          $1,755,894     $1,755,894
Operating Profit                          202,730        189,960
Net Earnings                              108,290        100,688 (4,5)
Diluted Earnings per Common Share           $1.44          $1.34 (4,5)
Adjusted EBITDA                          $249,459       $249,459

Reconciliation to Adjusted EBITDA:

Earnings before income taxes              173,358        160,588
Add back:
  Restructuring expense                        --         13,028
  Hurricanes expense impact                    --          4,075
  Litigation credit & settlement               --         (8,000)
  Finance charges from refinancing             --             --
  Interest expense, net                    29,372         29,372
  Depreciation of property assets          40,018         40,018
  Amortization of intangibles               6,711         10,378 (6)
                                   --------------- --------------

Adjusted EBITDA                          $249,459       $249,459

(1) Including the effects of a $2.2 million pre-tax expense in the third 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 third quarter of 2006 and for the nine month period ended September 30, 2006.

(2) Including the effects of a $4.95 million pre-tax expense in the third quarter of 2006 associated with the settlement of the Burdusis/French/Corso litigation. The expense reduced diluted earnings per share by approximately $0.04 in the third quarter of 2006 and by approximately $0.05 for the nine month period ended September 30, 2006.

(3) Including the effects of a $10.4 million pre-tax expense in the third quarter of 2006 associated with the settlement with the California Attorney General. The expense reduced diluted earnings per share by approximately $0.09 in both the third quarter of 2006 and the nine month period ended September 30, 2006.

(4) Including the effects of a $13.0 million pre-tax restructuring expense as part of the store consolidation plan announced September 6, 2005 and $7.7 million in pre-tax expenses related to the damage caused by Hurricanes Katrina and Rita. The expenses reduced diluted earnings per share in both the third quarter of 2005 and the nine month period ended September 30, 2005, by $0.12 for the restructuring expense and by $0.08 for the hurricanes expense.

(5) Including the effects of an $8.0 million pre-tax credit in the first quarter of 2005 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 nine month period ended September 30, 2005 by $0.10.

(6) Includes $3.667 million of goodwill impairment related to Hurricanes Katrina and Rita.


Selected Balance Sheet Data: (in Thousands of    September  September
 Dollars)                                         30, 2006   30, 2005
                                                 ---------- ----------

      Cash and cash equivalents                    $53,706    $52,790
      Prepaid expenses and other assets             47,303     42,067
      Rental merchandise, net
           On rent                                 638,091    572,224
           Held for rent                           195,086    178,825
      Total Assets                               2,064,725  1,939,384

      Senior debt                                  358,468    406,625
      Subordinated notes payable                   300,000    300,000
      Total Liabilities                          1,117,145  1,117,385
      Stockholders' Equity                         947,580    821,999

                 Rent-A-Center, Inc. and Subsidiaries

                 CONSOLIDATED STATEMENTS OF EARNINGS

(In Thousands of Dollars, except per share data)   Three Months Ended
                                                      September 30,
                                                   -------------------
                                                     2006      2005
                                                   --------- ---------
                                                        Unaudited

Store Revenue
  Rentals and Fees                                 $532,260  $516,433
  Merchandise Sales                                  36,343    39,212
  Installment Sales                                   6,798     6,372
  Other                                               3,723     2,938
                                                   --------- ---------
                                                    579,124   564,955

Franchise Revenue
  Merchandise Sales                                   6,779     7,245
  Royalty Income and Fees                             1,281     1,307
                                                   --------- ---------
    Total Revenue                                   587,184   573,507

Operating Expenses
  Direct Store Expenses
    Cost of Rentals and Fees                        117,018   112,174
    Cost of Merchandise Sold                         28,422    30,314
    Cost of Installment Sales                         2,856     2,556
    Salaries and Other Expenses                     340,379   350,389
  Franchise Cost of Merchandise Sold                  6,523     6,964
                                                   --------- ---------
                                                    495,198   502,397


  General and Administrative Expenses                23,806    21,176
  Amortization of Intangibles                         1,009     5,926
  Litigation Settlement/(Reversion)                  15,300        --
  Restructuring Charge                                   --    13,028
                                                   --------- ---------

    Total Operating Expenses                        535,313   542,527
                                                   --------- ---------

    Operating Profit                                 51,871    30,980

Finance Charges from Refinancing                      2,165        --
Interest Income                                      (1,335)   (1,331)
Interest Expense                                     13,322    11,802
                                                   --------- ---------

    Earnings before Income Taxes                     37,719    20,509

Income Tax Expense                                   12,478     9,232
                                                   --------- ---------

    NET EARNINGS                                     25,241    11,277
                                                   ========= =========

BASIC WEIGHTED AVERAGE SHARES                        69,808    72,826
                                                   ========= =========

BASIC EARNINGS PER COMMON SHARE                       $0.36     $0.15
                                                   ========= =========

DILUTED WEIGHTED AVERAGE SHARES                      70,853    73,713
                                                   ========= =========

DILUTED EARNINGS PER COMMON SHARE                     $0.36     $0.15
                                                   ========= =========

                 Rent-A-Center, Inc. and Subsidiaries

                 CONSOLIDATED STATEMENTS OF EARNINGS

(In Thousands of Dollars, except per share       Nine Months Ended
 data)                                              September 30,
                                               -----------------------
                                                  2006        2005
                                               ----------- -----------
                                                      Unaudited

Store Revenue
  Rentals and Fees                             $1,579,719  $1,561,694
  Merchandise Sales                               138,934     139,480
  Installment Sales                                18,377      19,574
  Other                                            10,263       5,013
                                               ----------- -----------
                                                1,747,293   1,725,761

Franchise Revenue
  Merchandise Sales                                26,752      26,032
  Royalty Income and Fees                           3,737       4,101
                                               ----------- -----------
    Total Revenue                               1,777,782   1,755,894

Operating Expenses
  Direct Store Expenses
    Cost of Rentals and Fees                      344,518     338,710
    Cost of Merchandise Sold                      100,955     100,606
    Cost of Installment Sales                       7,677       8,169
    Salaries and Other Expenses                 1,012,263   1,017,369
  Franchise Cost of Merchandise Sold               25,659      24,993
                                               ----------- -----------
                                                1,491,072   1,489,847


  General and Administrative Expenses              66,017      60,681
  Amortization of Intangibles                       2,845      10,378
  Litigation Settlement/(Reversion)                15,300      (8,000)
  Restructuring Charge                                 --      13,028
                                               ----------- -----------

    Total Operating Expenses                    1,575,234   1,565,934
                                               ----------- -----------

    Operating Profit                              202,548     189,960

Finance Charges from Refinancing                    2,165          --
Interest Income                                    (4,194)     (4,084)
Interest Expense                                   39,646      33,456
                                               ----------- -----------

    Earnings before Income Taxes                  164,931     160,588

Income Tax Expense                                 59,519      59,900
                                               ----------- -----------

                NET EARNINGS                      105,412     100,688
                                               =========== ===========

BASIC WEIGHTED AVERAGE SHARES                      69,536      74,044
                                               =========== ===========

BASIC EARNINGS PER COMMON SHARE                     $1.52       $1.36
                                               =========== ===========

DILUTED WEIGHTED AVERAGE SHARES                    70,581      75,262
                                               =========== ===========

DILUTED EARNINGS PER COMMON SHARE                   $1.49       $1.34
                                               =========== ===========

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

SOURCE: Rent-A-Center, Inc.



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