We continued to execute in our core rent-to-own business as demonstrated by our fifth consecutive quarter of positive same store sales.
Mark E. Speese, Chairman and CEO, Rent A Center

Rent-A-Center (RCII) reported total revenues for the quarter ended March 31, 2007 of $755.3 million, a $148.3 million increase from the same period in 2006. This 24.4% increase in revenues was primarily driven by the Rent-Way acquisition that closed on November 15, 2006, and a 2.9% increase in same store sales.

Net earnings for the quarter ended March 31, 2007 were $15.1 million, when including the Perez litigation charges discussed below, a decrease of $25.2 million from the reported net earnings of $40.3 million for the same period in the prior year.

When excluding the Perez litigation net earnings increased 17.4% from the reported net earnings of $40.3 million for the same period in 2006.

* Update
According to attorneys for Hilda Perez, Seth R. Lesser of the Locks Law Firm, Mark R. Cuker of Williams Cuker Berezofsky, and William Riback of the Law Office of William Riback, an agreement has been reached to settle the Perez class action lawsuit against Rent-A-Center, for $109 million ($85 million plus attorneys fees). The settlement will fully reimburse those customers who entered into contracts with Rent-A-Center in the State of New Jersey during the period April 23, 1999 through March 16, 2006 for the amounts that they paid Rent-A-Center in excess of that permitted under the New Jersey law as resolved by the New Jersey Supreme Court in this case. The attorneys said 100,000 Rent-A-Center customers will each receive, on average, $800.00 each. The attorneys in the case will keep over $23 million.

“We continued to execute in our core rent-to-own business as demonstrated by our 2.9% increase in same store sales, our fifth consecutive quarter of positive same store sales,” commented Mark E. Speese, Rent-A-Center’s Chairman and Chief Executive Officer. “In the quarter, we also completed the integration of the Rent-Way acquisition and are now working to enhance the profitability of these stores. In addition, we continued our expansion into the financial services industry with the opening of 29 financial services locations within existing rent-to-own stores, ending the quarter with 177 locations.”

Rent-A-Center will broadcast its quarterly earnings conference call on Tuesday, May 1, 2007 at 10:45 AM ET over the Internet.

Audio of the call will be broadcast live. A link to the live webcast will be available from My RTO Portfolio.

Rent-A-Center confirmed it has reached a prospective settlement with the plaintiffs to resolve Hilda Perez v. Rent-A-Center, Inc., a putative class action filed in the Superior Court, Law Division, Camden County, New Jersey. This matter alleges that the rent-to-own contracts entered into by Perez and a class of similarly situated individuals violated New Jersey’s Retail Installment Sales Act and New Jersey’s Consumer Fraud Act, because such contracts imposed a time price differential in excess of the per annum interest rate permitted under New Jersey’s criminal usury statute. Under the terms contemplated, Rent-A-Center anticipates it will pay an aggregate of approximately $85.8 million in cash, to be distributed to an agreed-upon class of Company customers from April 23, 1999 through March 16, 2006, as well as pay the plaintiffs' attorneys fees and costs to administer the settlement, in the aggregate amount of approximately $23.5 million. Under the terms of the prospective settlement, Rent-A-Center would be entitled to 50% of any undistributed monies in the settlement fund. In connection with the prospective settlement, the Company is not admitting liability for its past business practices in New Jersey. As previously reported, Rent-A-Center recorded a pre-tax expense of $58.0 million in connection with the Perez matter during the fourth quarter of 2006. To account for the aforementioned costs, the Company recorded an additional pre-tax charge of $51.3 million in the first quarter of 2007.

The terms of the prospective settlement are subject to the parties entering into a definitive settlement agreement and obtaining court approval. While Rent-A-Center believes that the terms of this prospective settlement are fair, there can be no assurance that the settlement, if completed, will be approved by the court in its present form. Rent-A-Center expects to fund the prospective settlement with cash flow generated from operations, together with amounts available under its senior credit facilities.

Operations Highlights

During the first quarter of 2007, Rent-A-Center opened six new rent-to-own store locations, acquired accounts from three locations, consolidated 33 stores (of which 23 stores were due to the Rent-Way transaction) into existing locations and sold one acquired Rent-Way store, for a net reduction of 28 stores and an ending balance as of March 31, 2007 of 3,378 stores. During the first quarter of 2007, the Company added financial services to 29 existing rent-to-own store locations, closed two locations and ended the quarter with a total of 177 stores providing these services.

Since March 31, 2007, Rent-A-Center has opened one new rent-to-own store location, acquired seven stores and consolidated one store into an existing location. The Company has added financial services to 27 existing rent-to-own store locations since March 31, 2007.

Rent-A-Center, Inc. operates approximately 3,385 company-owned stores nationwide and in Canada and Puerto Rico.

SECOND QUARTER 2007 GUIDANCE:

Revenues

Rent-A-Center expects total revenues to be in the range of $719 million to $734 million.
Store rental and fee revenues are expected to be between $655 million and $667 million.
Total store revenues are expected to be in the range of $709 million to $724 million.
Same store sales are expected to be in the 0.5% to 2.0% range.
Rent-A-Center expects to open 5 - 10 new rent-to-own store locations.
The Company expects to add financial services to 40 - 60 rent-to-own store locations.
Expenses

Rent-A-Center expects cost of rental and fees to be between 21.6% and 22.0% of store rental and fee revenue and cost of merchandise sold to be between 70% and 75% of store merchandise sales.
Store salaries and other expenses are expected to be in the range of 57.2% to 58.7% of total store revenue.
General and administrative expenses are expected to be between 4.0% and 4.2% of total revenue.
Net interest expense is expected to be approximately $22 million, depreciation of property assets to be approximately $17 million and amortization of intangibles is expected to be approximately $3.9 million.
The effective tax rate is expected to be approximately 37% of pre-tax income.
Diluted earnings per share are estimated to be in the range of $0.57 to $0.63.
Diluted shares outstanding are estimated to be between 71 million and 72 million.

FISCAL 2007 GUIDANCE:

Revenues

Rent-A-Center expects total revenues to be in the range of $2.915 billion and $2.955 billion.
Store rental and fee revenues are expected to be between $2.615 billion and $2.655 billion.
Total store revenues are expected to be in the range of $2.875 billion and $2.915 billion.
Same store sales are expected to be in the 1.0% to 2.0% range.
The Company expects to open approximately 30 new rent-to-own store locations.
Rent-A-Center expects to add financial services to approximately 200 rent-to-own 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 merchandise sold to be between 70% and 75% of store merchandise sales.
Store salaries and other expenses are expected to be in the range of 57.5% to 59.0% of total store revenue.
General and administrative expenses are expected to be between 4.0% and 4.2% of total revenue.
Net interest expense is expected to be between $83 million and $88 million, depreciation of property assets is expected to be between $65 million and $70 million and amortization of intangibles is expected to be approximately $15.5 million.
The effective tax rate is expected to be approximately 37% of pre-tax income.
Diluted earnings per share are estimated to be in the range of $2.24 to $2.32.
Diluted shares outstanding are estimated to be between 71 million and 72.5 million.