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

Business Wire, July 26, 2004

PLANO, Texas -- 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.