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Press Release

Rent-A-Center, Inc. Reports Second Quarter 2004 Results; Diluted Earnings per Share of $0.62; Board Approves Increased Stock Repurchase Authorization

PLANO, Texas--(BUSINESS WIRE)--July 26, 2004--Rent-A-Center, Inc. (the "Company") (Nasdaq/NNM:RCII), the leading rent-to-own operator in the U.S., today announced quarterly revenues and net earnings for the period ended June 30, 2004.

The Company, the nation's largest rent-to-own operator, had total revenues for the quarter ended June 30, 2004, of $573.0 million, a $19.7 million increase from $553.3 million for the same period in the prior year. This increase of 3.6% in revenues was primarily driven by incremental revenues generated in new and acquired stores, offset by a decrease in same store sales of 2.3%.

Net earnings for the quarter ended June 30, 2004, were $51.2 million, or $0.62 per diluted share, representing an increase of 6.9% over $0.58 per diluted share, or net earnings of $52.3 million, when excluding the charges discussed below, reported for the same period in the prior year. The increase in earnings per diluted share is primarily the result of lower interest expense as well as a reduction in the number of the Company's outstanding shares, offset by a slight decrease in net earnings attributable to an increase in operating expenses related to new store openings as well as the recently closed and integrated acquisitions of Rainbow Rentals and Rent-Rite.

Net earnings for the six months ended June 30, 2004, were $103.4 million, or $1.25 per diluted share, representing an increase of 8.7% over $1.15 per diluted share, or net earnings of $103.3 million, when excluding the charges discussed below, for the same period in the prior year. Total revenues for the six months ended June 30, 2004, increased to $1,158.4 million from $1,119.7 million in 2003, representing an increase of 3.5%. Same store revenues for the six-month period ending June 30, 2004, decreased 2.2%.

Through the six-month period ended June 30, 2004, the Company generated cash flow from operations of approximately $199.7 million, an increase of over 30% for the same period of the prior year, while ending the quarter with $86.2 million of cash on hand. The Company also announced that its Board of Directors has increased the authorization for stock repurchases under the Company's common stock repurchase program to $200 million. Through the six month period ended June 30, 2004, the Company repurchased 2,621,400 shares for $77.3 million in cash under the program and has utilized a total of $104.2 million of the total amount authorized by its Board of Directors since the inception of the plan.

"We are pleased to be reporting diluted earnings per share of $0.62, the high side of our guidance for the quarter," commented Mark E. Speese, the Company's Chairman and Chief Executive Officer. "While we have seen an increase in total revenues, as expected, our net earnings are slightly below last year, reflecting the temporary impact of our two recent acquisitions, our new store initiatives, as well as the impact on our same store sales from, among other things, higher fuel and energy costs that burden our customer." Speese continued, "We continue to believe the recent acquisitions will add approximately $27 million to our operating profits in 2005 as our proven business model takes root in the acquired stores." Speese added, "Therefore, we intend to continue pursuing our long term strategic initiative of increasing our store base between 5% and 10% annually for the next several years, realizing the negative impact on our same store sales resulting from cannibalization as we strategically open stores near market areas served by existing stores in order to meet customer service objectives, gain incremental sales and increase market penetration."

During the second quarter of 2004, the Company opened 25 new locations and acquired 161 additional stores while consolidating 12 locations into existing stores. The Company also purchased accounts from 63 additional locations during the second quarter of 2004. Since June 30, 2004, the Company has opened four additional new stores while consolidating one location into an existing store.

During the second quarter of 2003, the Company recorded $27.7 million in pre-tax charges associated with its recapitalization. These charges reduced diluted earnings per share in the second quarter of 2003 by $0.19 to the reported diluted earnings per share of $0.39. Additionally, these charges reduced diluted earnings per share for the six month period ended June 30, 2003, by $0.19 to the reported diluted earnings per share of $0.95.

Rent-A-Center will host a conference call to discuss the second quarter financial results and other business updates on Tuesday morning, July 27, 2004, 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 2,849 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 franchisor of 319 rent-to-own stores, 307 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 effects of an anticipated non-cash finance charge of $4.2 million to be recorded in the third quarter of 2004 associated with the recent refinancing of the Company's senior debt, any repurchases of common stock the Company may make or the potential impact of store acquisitions that may be completed after July 27, 2004.

    THIRD QUARTER 2004 GUIDANCE:

    Revenues

    --  The Company expects total revenues to be in the range of $585
        million to $590 million.

    --  Store rental and fee revenues are expected to be between $529
        million and $534 million.

    --  Total store revenues are expected to be in the range of $572
        million to $577 million.

    --  Same store sales are expected to be in the (1.5%) to (2.5%)
        range.

    --  The Company expects to open 20-25 new store locations.

    Expenses

    --  The Company expects depreciation of rental merchandise to be
        between 21.5% and 21.9% 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 56.0% and 57.5% of total store revenue.

    --  General and administrative expenses are expected to be between
        3.2% and 3.4% of total revenue.

    --  Net interest expense is expected to be approximately $9.0
        million and amortization is expected to be approximately $3.0
        million.

    --  The effective tax rate is expected to be between approximately
        37.5% and 38.0% of pre-tax income.

    --  Diluted earnings per share are estimated to be in the range of
        $0.58 to $0.60.

    --  Diluted shares outstanding are estimated to be between 81.0
        million and 82.0 million shares.

    FISCAL 2004 GUIDANCE:

    Revenues

    --  The Company expects total revenues to be in the range of $2.36
        billion and $2.38 billion.

    --  Store rental and fee revenues are expected to be between $2.10
        billion and $2.12 billion.

    --  Total store revenues are expected to be in the range of $2.30
        billion and $2.32 billion.

    --  Same store sales are expected to be in the (1.0%) to (2.0%)
        range.

    --  The Company expects to open approximately 100 new store
        locations.

    Expenses

    --  The Company expects depreciation of rental merchandise to be
        between 21.5% and 21.9% of store rental and fee revenue and
        cost of goods merchandise sales to be between 72% and 76% 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
        3.1% and 3.3% of total revenue.

    --  Net interest expense is expected to be between $35.0 million
        and $40.0 million and amortization of intangibles is expected
        to be approximately $11.0 million.

    --  The effective tax rate is expected to be between approximately
        37.5% and 38.0% of pre-tax income.

    --  Diluted earnings per share are estimated to be in the range of
        $2.62 to $2.70.

    --  Diluted shares outstanding are estimated to be between 81.0
        million and 83.0 million shares.

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; the Company's ability to enhance the performance of the acquired Rainbow and Rent-Rite stores; the ability to realize the cost savings anticipated; 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 Dec. 31, 2003, and its quarterly report on Form 10-Q for the three month period ended March 31, 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 June 30,
                                -----------------------------------
                                   2004        2003        2003
                                ----------- ----------- -----------
                                              Before      After
                                              Finance     Finance
                                              Charges     Charges
                                ----------- ----------- -----------


Total Revenue                     $572,985    $553,260    $553,260
Operating Profit                    90,223      97,238      97,238
Net Earnings                        51,194      52,293      35,300 (1)
Diluted Earnings per Common
 Share                               $0.62       $0.58       $0.39 (1)
EBITDA                            $105,215    $111,367    $111,367

Reconciliation to EBITDA:

Reported earnings before income
 taxes                              81,459      85,376      57,628
Add back:
    Finance charge from
     recapitalization                   --          --      27,748
    Interest expense, net            8,764      11,862      11,862
    Depreciation of property
     assets                         11,834      10,833      10,833
    Amortization of intangibles      3,158       3,296       3,296
                                ----------- ----------- -----------

EBITDA                            $105,215    $111,367    $111,367


                                     Six Months Ended June 30,
                                -----------------------------------
                                   2004        2003        2003
                                ----------- ----------- -----------
                                              Before      After
                                              Finance     Finance
                                              Charges     Charges
                                ----------- ----------- -----------


Total Revenue                   $1,158,365  $1,119,666  $1,119,666
Operating Profit                   182,882     193,529     193,529
Net Earnings                       103,403     103,252      86,259 (1)
Diluted Earnings per Common
 Share                               $1.25       $1.14       $0.95 (1)
EBITDA                            $211,611    $220,651    $220,651

Reconciliation to EBITDA:

Reported earnings before income
 taxes                             165,262     168,915     141,167
Add back:
    Finance charge from
     recapitalization                   --          --      27,748
    Interest expense, net           17,620      24,614      24,614
    Depreciation of property
     assets                         23,083      20,953      20,953
    Amortization of intangibles      5,646       6,169       6,169
                                ----------- ----------- -----------

EBITDA                            $211,611    $220,651    $220,651


(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 $0.19 from $0.58 per diluted share to $0.39, as well as
    reducing diluted earnings per share for the six month period ended
    June 30, 2003, to the reported $0.95 from $1.14 per diluted share.



Selected Balance Sheet Data: (in Thousands of     June 30,   June 30,
 Dollars)                                           2004       2003
                                                 ---------- ----------

     Cash and cash equivalents                     $86,164   $248,250
     Prepaid expenses and other assets              57,155     34,726
     Rental merchandise, net
             On rent                               565,977    530,985
             Held for rent                         169,044    143,415
     Total Assets                                1,930,203  1,870,277

     Senior debt                                   396,000    400,000
     Subordinated notes payable                    300,000    384,455
     Total Liabilities                           1,069,985  1,057,340
     Stockholders' Equity                          860,218    812,937



                 Rent-A-Center, Inc. and Subsidiaries

                 CONSOLIDATED STATEMENTS OF EARNINGS

(In Thousands of Dollars, except per share data)   Three Months Ended
                                                         June 30,
                                                   -------------------
                                                     2004      2003
                                                   --------- ---------
                                                        Unaudited

Store Revenue
   Rentals and Fees                                $520,593  $504,352
   Merchandise Sales                                 34,599    32,528
         Installment Sales                            5,801     4,745
   Other                                                967       812
                                                   --------- ---------
                                                    561,960   542,437

Franchise Revenue
   Franchise Merchandise Sales                        9,668     9,261
   Royalty Income and Fees                            1,357     1,562
                                                   --------- ---------
       Total Revenue                                572,985   553,260

Operating Expenses
   Direct Store Expenses
       Depreciation of Rental Merchandise           112,113   109,341
       Cost of Merchandise Sold                      25,350    24,235
                 Cost of Installment Sales            2,477     2,090
       Salaries and Other Expenses                  311,058   291,726
   Franchise Operation Expenses
       Cost of Franchise Merchandise Sales            9,214     8,946
                                                   --------- ---------
                                                    460,212   436,338


   General and Administrative Expenses               19,392    16,388
   Amortization of Intangibles                        3,158     3,296
                                                   --------- ---------

       Total Operating Expenses                     482,762   456,022
                                                   --------- ---------

       Operating Profit                              90,223    97,238

Finance Charge from Recapitalization                     --    27,748
Interest Income                                      (1,488)   (1,208)
Interest Expense                                     10,252    13,070
                                                   --------- ---------

       Earnings before Income Taxes                  81,459    57,628

Income Tax Expense                                   30,265    22,328
                                                   --------- ---------

       NET EARNINGS                                  51,194    35,300

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

Net earnings allocable to common stockholders       $51,194   $35,300
                                                   ========= =========

BASIC WEIGHTED AVERAGE SHARES                        79,464    87,498
                                                   ========= =========

BASIC EARNINGS PER COMMON SHARE                       $0.64     $0.40
                                                   ========= =========

DILUTED WEIGHTED AVERAGE SHARES                      81,980    90,768
                                                   ========= =========

DILUTED EARNINGS PER COMMON SHARE                     $0.62     $0.39
                                                   ========= =========


                 Rent-A-Center, Inc. and Subsidiaries

                 CONSOLIDATED STATEMENTS OF EARNINGS

(In Thousands of Dollars, except per share        Six Months Ended
 data)                                                 June 30,
                                                ----------------------
                                                   2004       2003
                                                ----------- ----------
                                                      Unaudited

Store Revenue
   Rentals and Fees                             $1,024,883   $997,771
   Merchandise Sales                                94,022     85,192
         Installment Sales                          12,499     10,790
   Other                                             2,047      1,527
                                                ----------- ----------
                                                 1,133,451  1,095,280

Franchise Revenue
   Franchise Merchandise Sales                      22,132     21,333
   Royalty Income and Fees                           2,782      3,053
                                                ----------- ----------
       Total Revenue                             1,158,365  1,119,666

Operating Expenses
   Direct Store Expenses
       Depreciation of Rental Merchandise          220,428    216,001
       Cost of Merchandise Sold                     64,961     60,783
                 Cost of Installment Sales           5,622      5,321
       Salaries and Other Expenses                 620,142    584,222
   Franchise Operation Expenses
       Cost of Franchise Merchandise Sales          21,106     20,497
                                                ----------- ----------
                                                   932,259    886,824


   General and Administrative Expenses              37,578     33,144
   Amortization of Intangibles                       5,646      6,169
                                                ----------- ----------

       Total Operating Expenses                    975,483    926,137
                                                ----------- ----------

       Operating Profit                            182,882    193,529

Finance Charge from Recapitalization                    --     27,748
Interest Income                                     (2,991)    (1,979)
Interest Expense                                    20,611     26,593
                                                ----------- ----------

       Earnings before Income Taxes                165,262    141,167

Income Tax Expense                                  61,859     54,908
                                                ----------- ----------

                NET EARNINGS                       103,403     86,259

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

Net earnings allocable to common stockholders     $103,403    $86,259
                                                =========== ==========

BASIC WEIGHTED AVERAGE SHARES                       79,874     87,370
                                                =========== ==========

BASIC EARNINGS PER COMMON SHARE                      $1.29      $0.99
                                                =========== ==========

DILUTED WEIGHTED AVERAGE SHARES                     82,433     90,303
                                                =========== ==========

DILUTED EARNINGS PER COMMON SHARE                    $1.25      $0.95
                                                =========== ==========

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

SOURCE: Rent-A-Center, Inc.