Rent-A-Center, Inc. Reports Second Quarter 2006 Results; Same Store Sales Increase 1.1% Reported Diluted Earnings per Share of $0.56

Business Wire, July 24, 2006

PLANO, Texas -- Rent-A-Center, Inc. (the "Company") (Nasdaq:RCII), the nation's largest rent-to-own operator, today announced revenues and net earnings for the quarter ended June 30, 2006.

Second Quarter 2006 Results

The Company reported total revenues for the quarter ended June 30, 2006 of $583.6 million, a $3.0 million increase from $580.6 million for the same period in the prior year. This increase of 0.5% in revenues was primarily driven by a 1.1% 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 June 30, 2006 were $39.8 million, or $0.56 per diluted share, representing an increase of 7.7% from the $0.52 per diluted share, or net earnings of $39.6 million for the same period in the prior year, when excluding the benefit of the 2005 tax audit reserve credit discussed below. The increase in reported net earnings per diluted share is primarily attributable to the increase in same store sales, as well as the reduction in the number of the Company's outstanding shares, offset by increases in normal operating costs, such as utility and fuel costs, and expenses related to stock options. When including the 2005 tax audit reserve credit discussed below, reported net earnings per diluted share for the quarter increased 1.8% from the $0.55 per diluted share, or reported net earnings of $41.7 million for the same period in the prior year.

Reported net earnings per diluted share also increased as a result of a $2.0 million insurance reserve credit resulting from the use of certain company specific loss development factors developed by independent actuaries, rather than the general industry loss development factors previously used by the Company. The $2.0 million insurance reserve credit had an approximate $0.02 per diluted share benefit in the quarter ended June 30, 2006.

"Our second quarter same store sales continued a positive trend in 2006," commented Mark E. Speese, the Company's Chairman and Chief Executive Officer. "Our same store sales increased 1.1% 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. "In addition, we believe our customer has adjusted to the current level of fuel costs. As a result of these factors, we are raising our fiscal 2006 guidance to $2.08 to $2.15 diluted earnings per share from $2.00 to $2.10," Speese stated.

Six Months Ended June 30, 2006 Results

Total reported revenues for the six months ended June 30, 2006 increased to $1.191 billion, a 0.8% increase from $1.182 billion for the same period in the prior year. Same store revenues for the six month period ending June 30, 2006 increased 1.4%.

Reported net earnings for the six months ended June 30, 2006 were $80.2 million, or $1.14 per diluted share, representing an increase of 5.6% from the $1.08 per diluted share, or net earnings of $82.3 million for the same period in the prior year, when excluding the benefit of the 2005 tax audit reserve and litigation reversion credits discussed below. When including these benefits in 2005, reported net earnings per diluted share for the six months ended June 30, 2006 decreased 3.4% from the $1.18 per diluted share, or reported net earnings of $89.4 million for the same period in the prior year.

Through the six month period ended June 30, 2006, the Company generated cash flow from operations of approximately $35.0 million, while ending the quarter with $41.2 million of cash on hand. During the six month period ended June 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 million authorized by its Board of Directors since the inception of the plan.

Operations Highlights

During the second quarter of 2006, the Company opened 9 new rent-to-own store locations, acquired 16 stores as well as accounts from 15 additional locations, consolidated 19 stores into existing locations, and sold 12 stores, for a net reduction of six stores and an ending balance of 2,749 stores. During the second quarter of 2006, the Company added financial services to 21 existing rent-to-own store locations and ended the quarter with a total of 77 stores providing these services.

Through the six month period ending June 30, 2006, the Company opened 19 new rent-to-own store locations, acquired 18 stores as well as accounts from 20 additional locations, consolidated 33 stores into existing locations, and sold 15 stores, for a net reduction of 11 stores. Through the six month period ending June 30, 2006, the Company added financial services to 38 existing rent-to-own store locations and consolidated one store with financial services into an existing location, for a net addition of 37 stores providing these services.