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Press Release

Rent-A-Center, Inc. Reports Record Second Quarter 2003 Results; Total Revenues Increase 11.8%, Same Store Sales Increase 2.7%, Diluted Earnings Per Share Rise 18.0%

    PLANO, Texas--(BUSINESS WIRE)--July 28, 2003--

                 Board Declares a 5-for-2 Stock Split

Rent-A-Center, Inc. (the "Company") (NASDAQ/NNM:RCII), the leading rent-to-own operator in the U.S., today announced record quarterly net earnings for the period ended June 30, 2003, when excluding the non-recurring recapitalization charges discussed below.

The Company, the nation's largest rent-to-own operator, had total revenues for the quarter ended June 30, 2003 of $553.3 million, a $58.6 million increase from $494.7 million for the same period in the prior year. This increase of 11.8% in revenues was primarily driven by incremental revenues generated in new and acquired stores, as well as growth in same store revenues. Same store revenues (revenues earned in stores operated for the entirety of both periods) during the second quarter of 2003 increased 2.7% above the comparable quarter of 2002.

Net earnings for the quarter ended June 30, 2003, when excluding the non-recurring recapitalization charges discussed below, were $52.3 million, or $1.44 per diluted share. This represented an increase of 18.0% over $1.22 per diluted share, or net earnings of $44.9 million, when excluding the charges discussed below, reported for the same period in the prior year. The increase in net earnings and earnings per diluted share is primarily attributable to the Company's increase in revenues, operational improvements in existing stores and a continued focus on cost control.

Net earnings for the six months ended June 30, 2003, when excluding the recapitalization charges, were $103.3 million, or $2.86 per diluted share, representing an increase of 18.2% over $2.42 per diluted share, or net earnings of $88.4 million, when excluding the charges discussed below, for the same period in the prior year. Total revenues for the six months ended June 30, 2003 increased to $1,119.7 million from $993.3 million in 2002, representing an increase of 12.7%. Same store revenues for the six-month period ending June 30, 2003 increased 4.2%.

The Company also announced that its Board of Directors has approved a 5 for 2 stock split on its common stock to be paid in the form of a stock dividend. Each common stockholder of record on August 15, 2003 will receive 1.5 additional shares of common stock for each share of common stock held on that date. No fractional shares will be issued in connection with the stock dividend. Each stockholder who would otherwise receive a fractional share will receive an additional share of common stock. The distribution date for the stock dividend will be August 29, 2003. As of July 25, 2003, the Company had approximately 32.8 million shares of common stock outstanding. The stock split will increase the common shares outstanding to approximately 82.1 million shares.

"We are pleased to report another quarter of strong operating and financial results," commented Mark E. Speese, the Company's Chairman and Chief Executive Officer. "We believe the stock split we are announcing today and the fact that we intend to continue to repurchase additional shares of our common stock," Speese continued, "speaks to the confidence we have in both our core business and our growth initiatives through new stores and acquisitions."

During the second quarter of 2003, the Company recorded $27.7 million in pre-tax charges associated with its previously announced recapitalization plans. These charges reduced diluted earnings per share in the quarter by $0.47 to the reported diluted earnings per share of $0.97. Furthermore, during the second quarter of 2002, the Company wrote-off financing fees of approximately $2.9 million associated with the early retirement of approximately $128.0 million in debt, and recorded a charge of $2.0 million relating to the settlement of its class action gender discrimination lawsuits. These charges reduced diluted earnings per share in the second quarter of 2002 by $0.08 to $1.14.

During the second quarter of 2003, the Company opened 18 new locations and acquired 10 additional stores while consolidating three locations into existing stores. The Company also purchased accounts from 12 additional locations during the second quarter of 2003. Since June 30, 2003, the Company has opened five additional new stores, acquired one store location and has purchased accounts from two additional locations. "We are very excited about the results of our new store opening program," commented Mitchell E. Fadel, the Company's President and Chief Operating Officer. "Our new stores are ahead of our expectations," Fadel added, "and will therefore continue to be a vital part of our continued growth initiatives."

Through the six-month period ending June 30, 2003, the Company generated cash flow from operations of approximately $153.4 million, ending the quarter with $248.3 million of cash on hand. In addition to growing its store base, the Company intends to utilize its available cash to redeem the remaining $84.5 million in 11% subordinated notes and, as previously announced, repurchase additional shares of common stock.

Rent-A-Center will host a conference call to discuss the second quarter financial results and other business updates on Tuesday morning July 29, 2003 at 10:45 a.m. EDT. 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 2,574 company-owned stores nationwide and in 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 franchisor of 322 rent-to-own stores, 310 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, including the impact of our recapitalization plans. These statements are forward-looking, and actual results may differ materially. These statements do not include the effects of the stock split, any repurchases of common stock the Company may make or the potential impact of store acquisitions that may be completed after July 28, 2003.

THIRD QUARTER 2003 GUIDANCE:

Revenues
--  The Company expects total revenues to be in the range of $546
    million to $551 million.
--  Store rental and fee revenues are expected to be between $500
    million and $505 million.
--  Total store revenues are expected to be in the range of $536
    million to $541 million.
--  Same store sales increases are expected to be in the 2% to 4%
    range.
--  The Company expects to open 20-30 new store locations.

Expenses
--  The Company expects depreciation of rental merchandise to be
    between 21.6% and 22.0% of store rental and fee revenue and cost
    of goods merchandise sales to be between 75% and 80% of store
    merchandise sales.
--  Store salaries and other expenses are expected to be in the range
    of 54.0% and 55.5% of total store revenue.
--  General and administrative expenses are expected to be between
    3.0% and 3.2% of total revenue.
--  Net interest expense is expected to be approximately $11.0 million
    and amortization is expected to be approximately $3.2 million.
--  The effective tax rate is expected to be approximately 37.25% of
    pre-tax income.
--  Diluted earnings per share are estimated to be in the range of
    $1.42 to $1.44 on a pre-split basis.
--  Diluted shares outstanding are estimated to be between 33.6
    million and 34.0 million on a pre-split basis.

FISCAL 2003 GUIDANCE:

Revenues
--  The Company expects total revenues to be in the range of $2.21
    billion and $2.24 billion.
--  Store rental and fee revenues are expected to be between $1.99
    billion and $2.02 billion.
--  Total store revenues are expected to be in the range of $2.15
    billion and $2.18 billion.
--  Same store sales increases are expected to be in the 2% to 4%
    range.
--  The Company expects to open approximately 80 new store locations.

Expenses
--  The Company expects depreciation of rental merchandise to be
    between 21.6% and 22.0% of store rental and fee revenue and cost
    of goods merchandise sales to be between 73% and 78% of store
    merchandise sales.
--  Store salaries and other expenses are expected to be in the range
    of 53.5% and 55.0% of total store revenue.
--  General and administrative expenses are expected to be between
    3.0% and 3.2% of total revenue.
--  Net interest expense is expected to be between $45.0 million and
    $48.0 million and amortization of intangibles is expected to be
    approximately $12.0 million.
--  The effective tax rate is expected to be approximately 38.0% of
    pre-tax income.
--  Diluted earnings per share are estimated to be in the range of
    $5.80 to $5.90 on a pre-split basis.
--  Diluted shares outstanding are estimated to be between 34.8
    million and 35.2 million on a pre-split basis.

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, including the stores acquired in the Rent-Way acquisition; 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; uncertainties and volatility in the credit markets; factors that may restrict the Company's ability to redeem any outstanding notes on August 15, 2003, including the Company's financial situation at that time; 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, 2002 and its quarterly report on Form 10-Q for the three month period ending March 31, 2003. 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 June 30,
                       -----------------------------------------------
                          2003       2003        2002         2002
                       -----------------------------------------------
                       Before Non- After Non-  Before Non-  After Non-
                        Recurring   Recurring   Recurring   Recurring
                         Charges     Charges     Charges     Charges
                       -----------------------------------------------
                                          Unaudited
 
Total Revenue          $ 553,260  $ 553,260   $ 494,660   $ 494,660
Operating Profit          97,238     97,238      90,240      88,240(2)
Net Earnings              52,293    35,300(1)    44,864      41,943(2)
Diluted Earnings per
 Common Share          $    1.44  $   0.97(1) $    1.22   $    1.14(2)
 
EBITDA                 $ 111,367 $ 111,367   $ 100,574    $  98,574(2)


Reconciliation to
 EBITDA:

Reported earnings
 before income taxes      85,376     57,628      75,388      70,479
Add back:
  Non-recurring
   financing costs            --     27,748          --       2,909
  Interest expense,
   net                    11,862     11,862      14,852      14,852
  Depreciation of
   property assets        10,833     10,833       9,412       9,412
  Amortization of
   intangibles             3,296      3,296         922         922
                       -----------------------------------------------
  
EBITDA                 $ 111,367  $ 111,367   $ 100,574   $  98,574(2)


                                   Six Months Ended June 30,
                       -----------------------------------------------
                          2003       2003        2002         2002
                       -----------------------------------------------
                       Before Non- After Non-  Before Non-  After Non-
                        Recurring   Recurring   Recurring   Recurring
                         Charges     Charges     Charges     Charges
                       -----------------------------------------------
                                          Unaudited

Total Revenue         $1,119,666  $1,119,666  $ 993,270   $ 993,270
Operating Profit         193,529     193,529    178,536     176,536(2)
Net Earnings             103,252      86,259(1)  88,427      85,506(2)
Diluted Earnings per
 Common Share         $     2.86       $2.34(1)   $2.42       $2.34(2)

EBITDA                $  220,651    $220,651  $ 199,056   $ 197,056(2)


Reconciliation to
 EBITDA:

Reported earnings
 before income taxes     168,915     141,167    148,609     143,700
Add back:
  Non-recurring
    financing costs           --      27,748         --       2,909
  Interest expense,
    net                   24,614      24,614     29,927      29,927
  Depreciation of
    property assets       20,953      20,953     18,878      18,878
  Amortization of
    intangibles            6,169       6,169      1,642       1,642
                        ----------  ----------   --------  -----------

EBITDA                $  220,651    $220,651   $199,056    $197,056(2)


(1) Including the effects of $27.7 million in pre-tax financing costs
    associated with refinancing the company's capital structure. These
    charges reduced diluted earnings per share in the second quarter
    of 2003 by $0.47 from $1.44 per diluted share to $0.97.

(2) Including the effects of a pre-tax legal charge of $2.0 million
    associated with the settlement of class action gender
    discrimination lawsuits and $2.9 million associated with the early
    retirement of debt. These charges reduced diluted earnings per
    share in the second quarter of 2002 by $0.08 from $1.22 per
    diluted share to $1.14.
Selected Balance Sheet Data:
(in Thousands of Dollars)              June 30, 2003 June 30, 2002
                                       -------------     -------------
   Cash and cash equivalents           $    248,250           $93,824
   Prepaid expenses and other assets         34,726            31,335
   Rental merchandise, net
        On rent                             530,985           517,500
        Held for rent                       143,415           131,705
   Total Assets                           1,870,277         1,604,597

   Senior debt                              400,000           300,000
   Subordinated notes payable               384,455           274,543
   Total Liabilities                      1,057,340           830,342
   Stockholders' Equity and
     Redeemable Preferred Stock             812,937           774,255
 Rent-A-Center, Inc. and Subsidiaries

                  CONSOLIDATED STATEMENTS OF EARNINGS


(In Thousands of Dollars,
except per share data)                    Three Months Ended June 30,
                                      --------------------------------
                                           2003               2002
                                      --------------      ------------
                                                  Unaudited

Store Revenue
   Rentals and Fees                     $    504,352         $456,149
   Merchandise Sales                          32,528           23,994
         Installment Sales                     4,745               --
   Other                                         812              567
                                      --------------      ------------
                                             542,437          480,710

Franchise Revenue
   Franchise Merchandise Sales                 9,261           12,486
   Royalty Income and Fees                     1,562            1,464
                                      --------------      ------------
       Total Revenue                         553,260          494,660

Operating Expenses
   Direct Store Expenses
     Depreciation of Rental Merchandise      109,341           94,354
     Cost of Merchandise Sold                 24,235           17,497
     Cost of Installment Sales                 2,090               --
     Salaries and Other Expenses             291,726          264,478
   Franchise Operation Expenses
     Cost of Franchise Merchandise Sales       8,946           11,884
                                      --------------      ------------
                                             436,338          388,213


   General and Administrative Expenses        16,388           17,285
   Amortization of Intangibles                 3,296              922
                                      --------------      ------------

       Total Operating Expenses              456,022          406,420
                                      --------------      ------------

       Operating Profit                       97,238           88,240

Non-Recurring Finance Charge                  27,748            2,909
Interest Income                               (1,208)            (705)
Interest Expense                              13,070           15,557
                                      --------------      ------------

       Earnings before Income Taxes           57,628           70,479

Income Tax Expense                            22,328           28,536
                                      --------------      ------------

       NET EARNINGS                           35,300           41,943

Preferred Dividends                               --            3,898
                                      --------------      ------------

Net earnings allocable to common
  stockholders                          $     35,300          $38,045
                                      ==============      ============

BASIC WEIGHTED AVERAGE SHARES                 34,999           25,708
                                      ==============      ============

BASIC EARNINGS PER COMMON SHARE         $       1.01            $1.48
                                      ==============      ============

DILUTED WEIGHTED AVERAGE SHARES               36,307           36,715
                                      ==============      ============

DILUTED EARNINGS PER COMMON SHARE              $0.97            $1.14
                                      ==============      ============
 Rent-A-Center, Inc. and Subsidiaries

                  CONSOLIDATED STATEMENTS OF EARNINGS

(In Thousands of Dollars,                  Six Months Ended June 30,
 except per share data)               --------------------------------
                                           2003               2002
                                      --------------      ------------
                                                  Unaudited

Store Revenue
   Rentals and Fees                     $    997,771         $899,854
   Merchandise Sales                          85,192           63,599
         Installment Sales                    10,790               --
   Other                                       1,527            1,181
                                      --------------      ------------
                                           1,095,280          964,634

Franchise Revenue
   Franchise Merchandise Sales                21,333           25,739
   Royalty Income and Fees                     3,053            2,897
                                      --------------      ------------
       Total Revenue                       1,119,666          993,270

Operating Expenses
   Direct Store Expenses
     Depreciation of Rental Merchandise      216,001          186,577
     Cost of Merchandise Sold                 60,783           44,479
     Cost of Installment Sales                 5,321               --
     Salaries and Other Expenses             584,222          527,097
   Franchise Operation Expenses
     Cost of Franchise Merchandise Sales      20,497           24,537
                                      --------------      ------------
                                             886,824          782,690


   General and Administrative Expenses        33,144           32,402
   Amortization of Intangibles                 6,169            1,642
                                      --------------      ------------

       Total Operating Expenses              926,137          816,734
                                      --------------      ------------

       Operating Profit                      193,529          176,536

Non-Recurring Finance Charge                  27,748            2,909
Interest Income                               (1,979)          (1,428)
Interest Expense                              26,593           31,355
                                      --------------      ------------

       Earnings before Income Taxes          141,167          143,700

Income Tax Expense                            54,908           58,194
                                      --------------      ------------

                NET EARNINGS                  86,259           85,506

Preferred Dividends                               --            8,890
                                      --------------      ------------

Net earnings allocable to common
  stockholders                               $86,259          $76,616
                                      ==============      ============

BASIC WEIGHTED AVERAGE SHARES                 34,948           25,111
                                      ==============      ============

BASIC EARNINGS PER COMMON SHARE                $2.47            $3.05
                                      ==============      ============

DILUTED WEIGHTED AVERAGE SHARES               36,121           36,518
                                      ==============      ============

DILUTED EARNINGS PER COMMON SHARE              $2.39            $2.34
                                      ==============      ============

CONTACT: Rent-A-Center, Inc., Plano
David E. Carpenter, 972-801-1214
dcarpenter@racenter.com
or
Robert D. Davis, 972-801-1204
rdavis@racenter.com
or
Mitchell E. Fadel, 972-801-1114
mfadel@racenter.com
or
Mark E. Speese, 972-801-1199
mspeese@racenter.com

SOURCE: Rent-A-Center, Inc.