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Press Release

Rent-A-Center, Inc. Reports Fourth Quarter and Year End 2004 Results

PLANO, Texas--(BUSINESS WIRE)--Feb. 7, 2005-- Diluted Earnings per Share of $0.55, Excluding One-Time Other Income Operating Cash Flow Exceeds $331 Million for the Year

Rent-A-Center, Inc. (the "Company") (Nasdaq/NNM:RCII), the nation's largest rent-to-own operator, today announced revenues and net earnings for the quarter and year ended December 31, 2004.

The Company reported total revenues for the quarter ended December 31, 2004 of $585.3 million, when excluding the one-time other income item discussed below, a $26.6 million increase from $558.7 million for the same period in the prior year. This increase of 4.8% in revenues was primarily driven by incremental revenues generated in new and acquired stores, offset by a decrease in same store sales of 3.7%. Net earnings for the quarter ended December 31, 2004 were $41.7 million, when excluding the one-time other income item discussed below, or $0.55 per diluted share, representing a decrease of 11.3% from the $0.62 per diluted share, or net earnings of $51.5 million for the same period in the prior year. The decrease in earnings per diluted share is attributable to a decrease in same store sales and an increase in operating expenses related to new store openings and acquisitions offset by a reduction in the number of the Company's outstanding shares.

Total revenues for the twelve months ended December 31, 2004 increased to $2.313 billion, when excluding the one-time other income item discussed below, a 3.8% increase from $2.228 billion for the same period in the prior year. Same store revenues for the twelve month period ending December 31, 2004 decreased 3.6%. Net earnings for the twelve months ended December 31, 2004 were $182.7 million, or $2.28 per diluted share, when excluding the one-time other income item and litigation and finance charges discussed below, a decrease of 2.1% over the diluted earnings per share of $2.33, or net earnings of $203.2 million for the prior year, when excluding the finance charges discussed below.

"We are pleased with the results for the fourth quarter, where we saw increases in revenues, customers and agreements on rent, and met 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 which we are utilizing to enhance stockholder value by, among other things, adding 5% to 10% annually to our store base and repurchasing our outstanding common shares," Speese added.

Through the twelve month period ended December 31, 2004, the Company generated cash flow from operations of approximately $331.0 million, while ending the quarter with $58.8 million of cash on hand. On September 28, 2004, the Company announced that its Board of Directors increased the authorization for stock repurchases under the Company's common stock repurchase program to $300 million. Through the twelve month period ended December 31, 2004, the Company repurchased 7,689,700 shares for $210.5 million in cash under the program and has utilized a total of $237.6 million of the total amount authorized by its Board of Directors since the inception of the plan.

During the fourth quarter of 2004, the Company opened 25 new store locations, acquired 4 stores as well as accounts from 17 additional locations while consolidating 12 stores into existing locations and selling 2 stores. Through the twelve month period ending December 31, 2004, the Company opened 94 new stores, acquired a total of 191 others as well as accounts from 111 additional locations while consolidating 49 stores into existing locations and selling 9 stores. This net addition of 227 new locations equated to an increase of approximately 8.6% to the store base. To date through the first quarter of 2005, the Company has opened 5 new store locations, acquired 2 stores and accounts from 6 additional locations, while consolidating 8 stores into existing locations and selling 3 stores.

"Our 2004 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," stated Mr. Speese. Mr. Speese added, "However, we are focused on improving our results with the recently implemented marketing and advertising initiatives, which should drive more customer traffic, and the implementation of new initiatives to improve our store operations. We believe these initiatives will ultimately make a positive impact on our customer's experience, resulting in the improvement of same store sales and growth in profitability."

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.

Furthermore, during 2003, the Company recorded $35.3 million in pre-tax charges associated with its recapitalization, $27.8 million in pre-tax charges in the second quarter of 2003 and $7.5 million in pre-tax charges in the third quarter of 2003. These charges reduced diluted earnings per share for the twelve month period ended December 31, 2003 by $0.25 to the reported diluted earnings per share of $2.08.

Rent-A-Center will host a conference call to discuss the fourth quarter and year end financial results on Tuesday morning, February 8, 2005, 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 2,871 company-owned stores nationwide and in Canada and Puerto Rico. The stores generally offer high-quality, durable goods such as home electronics, appliances, computers and furniture and accessories to consumers 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 307 rent-to-own stores, 295 of which operate under the trade name of "ColorTyme," and the remaining 12 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 or the potential impact of acquisitions that may be completed after February 7, 2005.

FIRST QUARTER 2005 GUIDANCE:

Revenues

-- The Company expects total revenues to be in the range of $598 million to $606 million.

-- Store rental and fee revenues are expected to be between $516 million and $521 million.

-- Total store revenues are expected to be in the range of $586 million to $594 million.

-- Same store sales are expected to be in the (3.5%) to (4.5%) range.

-- The Company expects to open 10-15 new 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 60% and 70% of store merchandise sales.

-- Store salaries and other expenses are expected to be in the range of 56.5% to 58.0% of total store revenue.

-- General and administrative expenses are expected to be between 3.3% and 3.5% of total revenue.

-- Net interest expense is expected to be approximately $10.5 million and amortization of intangibles is expected to be approximately $2.3 million.

-- The effective tax rate is expected to be in the range of 37.5% to 38.0% of pre-tax income.

-- Diluted earnings per share are estimated to be in the range of $0.55 to $0.59.

-- Diluted shares outstanding are estimated to be between 76.0 million and 77.0 million.

FISCAL 2005 GUIDANCE:

Revenues

-- The Company expects total revenues to be in the range of $2.39 billion and $2.42 billion.

-- Store rental and fee revenues are expected to be between $2.145 billion and $2.170 billion.

-- Total store revenues are expected to be in the range of $2.345 billion and $2.370 billion.

-- Same store sales increases are expected to be in the flat to (2.0%) range.

-- The Company expects to open 70 - 80 new 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 75% of store merchandise sales.

-- Store salaries and other expenses are expected to be in the range of 56.5% to 58.0% of total store revenue.

-- General and administrative expenses are expected to be between 3.3% and 3.5% of total revenue.

-- Net interest expense is expected to be between $39.0 million and $44.0 million and amortization of intangibles is expected to be approximately $7.5 million.

-- The effective tax rate is expected to be in the range of 37.5% to 38.0% of pre-tax income.

-- Diluted earnings per share are estimated to be in the range of $2.30 to $2.40.

-- Diluted shares outstanding are estimated to be between 76.5 million and 77.5 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 the ability to open new 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 results of the Company's litigation; the passage of legislation adversely affecting the rent-to-own industry; interest rates; the Company's ability to collect on its rental purchase agreements; 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; changes in fuel prices; 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/A for the year ended December 31, 2003, and its quarterly reports on Form 10-Q/A for the three month period ended March 31, 2004, Form 10-Q for the six month period ending June 30, 2004, and Form 10-Q for the nine month period ending September 30, 2004. 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,
                         -------------------------------
                                   2004        2004        2003
                              ------------- ---------- -----------
                                            After Sale
                                               of
                               Before Sale   Charged-
                               of Charged-     off
                               off Accounts  Accounts
                              ------------- ----------  ----------

Total Revenue                     $585,283    $585,283  $558,659
Operating Profit                    75,725      75,725    88,991
Net Earnings                        41,714   46,879 (1)   51,499
Diluted Earnings per
 Common Share                        $0.55    $0.61 (1)    $0.62
EBITDA                             $91,078     $91,078  $103,467

Reconciliation to EBITDA:

Reported earnings
 before income taxes                66,545      74,469    79,933
Add back:
    Litigation Settlement               --          --        --
    Other Income -
     Sale of Charged-
     Off Accounts                       --      (7,924)       --
    Interest expense, net            9,180       9,180     9,058
    Depreciation of
     property assets                12,975      12,975    11,316
    Amortization of intangibles      2,378       2,378     3,160
                                ----------- ----------  ---------

EBITDA                             $91,078     $91,078  $103,467


                            Twelve Months Ended December 31,
                    ------------------------------------------------
                        2004        2004         2003        2003
                    ----------- ------------- ----------- ----------
                    Before Sale
                    of Charged-  After Sale of
                        off      Charged-off
                     Accounts,    Accounts,
                     Litigation  Litigation &   Before      After
                     & Finance     Finance      Finance     Finance
                      Charges      Charges      Charges     Charges
                    ----------- ------------- ----------- ----------

Total Revenue        $2,313,255    $2,313,255  $2,228,150  $2,228,150
Operating Profit        329,951       282,951     370,022     370,022
Net Earnings            182,669  155,855 (1,2)    203,220  181,496 (3)
Diluted Earnings
 per Common Share         $2.28    $1.94 (1,2)      $2.33    $2.08 (3)
EBITDA                 $389,297      $389,297    $425,918    $425,918

Reconciliation to
 EBITDA:

Reported earnings
 before income taxes    294,628       251,379     326,090     290,830
Add back:
  Litigation
   Settlement              --        47,000          --          --
  Other Income -
   Sale of Charged-
   off Accounts            --        (7,924)         --          --
  Finance charge
   from
   recapitalization        --         4,173          --      35,260
  Interest expense,
   net                 35,323        35,323      43,932      43,932
  Depreciation of
   property assets     48,566        48,566      43,384      43,384
  Amortization of
   intangibles         10,780        10,780      12,512      12,512
                   ----------- ------------- ----------- -----------

EBITDA               $389,297      $389,297    $425,918    $425,918

(1) 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 by $0.06.

(2) 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. These charges reduced diluted earnings per
    share in the third quarter of 2004 by $0.40, to the reported
    diluted earnings per share of $0.07. Additionally, these charges,
    combined with the $7.9 million in one-time other income, 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.

(3) Including the effects of $35.3 million in pre-tax charges
    associated with its recapitalization, $27.8 million in pre-tax
    charges in the second quarter of 2003 and $7.5 million in pre-tax
    charges in the third quarter of 2003. These charges reduced
    diluted earnings per share for the twelve month period ended
    December 31, 2003 by $0.25 to the reported diluted earnings per
    share of $2.08.

Selected Balance Sheet Data:
 (in Thousands of Dollars)      December 31, 2004    December 31, 2003
                                -----------------    -----------------
    Cash and cash equivalents         $ 58,825            $ 143,941
    Prepaid expenses and other
     assets                             63,064               70,701
    Rental merchandise, net
       On rent                          596,447             542,909
       Held for rent                    162,664             137,792
    Total Assets                      1,965,802           1,831,302
    Senior debt                         408,250             398,000
    Subordinated notes payable          300,000             300,000
    Total Liabilities                 1,171,531           1,036,472
    Stockholders' Equity                794,271             794,830
                 Rent-A-Center, Inc. and Subsidiaries

                  CONSOLIDATED STATEMENTS OF EARNINGS

(In Thousands of Dollars, except per
 share data)
                                       Three Months Ended December 31,
                                      --------------------------------
                                               2004            2003
                                               ----            ----
                                                    Unaudited

Store Revenue
   Rentals and Fees                          $530,407        $503,300
   Merchandise Sales                           36,307          33,339
   Installment Sales                            6,336           6,780
   Other                                          602             859
                                      ----------------  --------------
                                              573,652         544,278

Franchise Revenue
   Franchise Merchandise Sales                 10,299          12,970
   Royalty Income and Fees                      1,332           1,411
                                      ----------------  --------------
       Total Revenue                          585,283         558,659

Operating Expenses
   Direct Store Expenses
       Cost of Rental and Fees                116,167         108,918
       Cost of Merchandise Sold                28,017          25,599
       Cost of Installment Sales                2,710           3,198
       Salaries and Other Expenses            331,374         299,466
   Franchise Operation Expenses
       Cost of Franchise Merchandise
        Sales                                   9,781          12,453
                                      ----------------  --------------
                                              488,049         449,634


   General and Administrative Expenses         19,131          16,874
   Amortization of Intangibles                  2,378           3,160
   Class Action Litigation Settlement              --              --
                                      ----------------  --------------

       Total Operating Expenses               509,558         469,668
                                      ----------------  --------------

       Operating Profit                        75,725          88,991

Other Income - Sale of Charged-off
 Accounts                                      (7,924)             --
Interest Income                                (1,255)         (1,361)
Interest Expense                               10,435          10,419
                                      ----------------  --------------

       Earnings before Income Taxes            74,469          79,933

Income Tax Expense                             27,590          28,434
                                      ----------------  --------------

       NET EARNINGS                            46,879          51,499

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

Net earnings allocable to common
 stockholders                                 $46,879         $51,499
                                      ================  ==============

BASIC WEIGHTED AVERAGE SHARES                  74,863          80,562
                                      ================  ==============

BASIC EARNINGS PER COMMON SHARE                 $0.63           $0.64
                                      ================  ==============

DILUTED WEIGHTED AVERAGE SHARES                76,427          83,488
                                      ================  ==============

DILUTED EARNINGS PER COMMON SHARE               $0.61           $0.62
                                      ================  ==============
                 Rent-A-Center, Inc. and Subsidiaries

                  CONSOLIDATED STATEMENTS OF EARNINGS


(In Thousands of Dollars, except per share      Twelve  Months Ended
 data)                                               December 31,
                                               -----------------------
                                                   2004        2003
                                               ----------- -----------
                                                      Unaudited

Store Revenue
   Rentals and Fees                            $2,071,866  $1,998,952
   Merchandise Sales                              166,594     152,984
   Installment Sales                               24,304      22,203
   Other                                            3,568       3,083
                                               ----------- -----------
                                                2,266,332   2,177,222

Franchise Revenue
   Franchise Merchandise Sales                     41,398      45,057
   Royalty Income and Fees                          5,525       5,871
                                               ----------- -----------
       Total Revenue                            2,313,255   2,228,150

Operating Expenses
   Direct Store Expenses
       Cost of Rental and Fees                    450,035     432,696
       Cost of Merchandise Sold                   119,098     112,283
       Cost of Installment Sales                   10,512      10,639
       Salaries and Other Expenses              1,277,926   1,180,115
   Franchise Operation Expenses
       Cost of Franchise Merchandise Sales         39,472      43,248
                                               ----------- -----------
                                                1,897,043   1,778,981


   General and Administrative Expenses             75,481      66,635
   Amortization of Intangibles                     10,780      12,512
   Class Action Litigation Settlement              47,000          --
                                               ----------- -----------

       Total Operating Expenses                 2,030,304   1,858,128
                                               ----------- -----------

       Operating Profit                           282,951     370,022

Finance Charge from Recapitalization                4,173      35,260
Other Income - Sale of Charged-off
 Accounts                                          (7,924)         --
Interest Income                                    (5,637)     (4,645)
Interest Expense                                   40,960      48,577
                                               ----------- -----------

       Earnings before Income Taxes               251,379     290,830

Income Tax Expense                                 95,524     109,334
                                               ----------- -----------

                NET EARNINGS                      155,855     181,496

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

Net earnings allocable to common
 stockholders                                    $155,855    $181,496
                                               =========== ===========

BASIC WEIGHTED AVERAGE SHARES                      78,150      84,139
                                               =========== ===========

BASIC EARNINGS PER COMMON SHARE                     $1.99       $2.16
                                               =========== ===========

DILUTED WEIGHTED AVERAGE SHARES                    80,247      87,208
                                               =========== ===========

DILUTED EARNINGS PER COMMON SHARE                   $1.94       $2.08
                                               =========== ===========

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

SOURCE: Rent-A-Center, Inc.