UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

RENT-A-CENTER, INC.

(Exact name of registrant as specified in charter)

Delaware (State or other jurisdiction of incorporation or organization)		0-25370 (Commission File Number)		45-0491516 (IRS Employer Identification No.)

5501 Headquarters Drive
Plano, Texas 75024
(Address of principal executive offices and zip code)

(972) 801-1100
(Registrant’s telephone
number, including area code)

N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below):

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425).

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

 

 

Item 2.02 Results of Operations and Financial Condition.

     Attached hereto as Exhibit 99.1 is the Registrant’s press release reflecting earnings information for the quarter ended March 31, 2010.

     The press release contains information regarding EBITDA (earnings before interest, taxes, depreciation and amortization), which is a non-GAAP financial measure as defined in Item 10(e) of Regulation S-K. The press release also contains a reconciliation of EBITDA to the Registrant’s reported earnings before income taxes. Management of the Registrant believes that presentation of EBITDA is useful to investors, as among other things, this information impacts certain financial covenants under the Registrant’s senior credit facilities. While management believes this non-GAAP financial measure is useful in evaluating the Registrant, this information should be considered as supplemental in nature and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Further, the non-GAAP financial measure may differ from similar measures presented by other companies.

     Pursuant to General Instruction B.2. of Form 8-K, all of the information contained in this Form 8-K and the accompanying exhibit shall be deemed to be “furnished” and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and, therefore, shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits.

(d)

Exhibits

Exhibit 99.1		Press Release, dated April 26, 2010.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EXHIBIT INDEX

Exhibit No.		Description
99.1		Press release, dated April 26, 2010

Exhibit 99.1

For Immediate Release:

RENT-A-CENTER, INC. REPORTS
FIRST QUARTER 2010 RESULTS

Reports Record Diluted Earnings per Share
Raises 2010 Revenue and EPS Guidance

Plano, Texas, April 26, 2010 — Rent-A-Center, Inc. (the “Company”) (NASDAQ/NGS: RCII), the nation’s largest rent-to-own operator, today announced revenues and earnings for the quarter ended March 31, 2010.

First Quarter 2010 Results

Total revenues for the quarter ended March 31, 2010 were $718.4 million, a decrease of $9.8 million from total revenues of $728.2 million for the same period in the prior year. This decrease in revenues was primarily attributable to the November 2009 divestiture of our subsidiary engaged in the prepaid telecommunications and energy business, which had contributed approximately $14.0 million in merchandise sales for the quarter ended March 31, 2009. Same store sales for the quarter ended March 31, 2010 were down 0.5%.

Net earnings and net earnings per diluted share for the quarter ended March 31, 2010 were $51.5 million and $0.77, respectively, as compared to $45.4 million and $0.68, respectively, for the same period in the prior year. Net earnings and net earnings per diluted share for the quarter ended March 31, 2009 increased as a result of $3.0 million in pre-tax litigation credits, or approximately $0.03 per share, related to the Hilda Perez matter as discussed below.

Net earnings per diluted share for the quarter ended March 31, 2010 were $0.77, as compared to adjusted net earnings per diluted share of $0.65, when excluding the pre-tax litigation credit above, for the quarter ended March 31, 2009, an increase of 18.5%.

“We are pleased to report another quarter of outstanding results, as we exceeded our total revenues and earnings guidance,” commented Mark E. Speese, the Company’s Chairman and Chief Executive Officer. “This was primarily due to continued strong customer demand while maintaining a strong cost discipline,” Speese stated. “Due to the strong trends in our customer traffic, our continued focus on the customer’s in-store experience as well as our expense management initiatives,” continued Mr. Speese, “we are pleased to announce increased earnings expectations for 2010 of between $2.60 and $2.80 per diluted share for 2010.”

Through the three month period ended March 31, 2010, the Company generated cash flow from operations of approximately $71.9 million, while ending the quarter with approximately $84.5 million of cash on hand. In addition, during the three month period ended March 31, 2010, the Company reduced its outstanding indebtedness by approximately $74.9 million, which consisted of approximately $6.4 million in mandatory payments as well as previously outstanding amounts of approximately $68.5 million under its revolving lines of credit as of December 31, 2009.

Operations Highlights

During the three month period ended March 31, 2010, the company-owned stores and financial services locations changed as follows:

		Three Months
		Ended
		March 31, 2010
Company-Owned Stores
Stores at beginning of period			3,007
New store openings			4
Acquired stores remaining open			—
Closed stores
Merged with existing stores			10
Sold or closed with no surviving store			4
Stores at end of period			2,997
Acquired stores closed and accounts merged with existing stores			3
Financial Services
Stores at beginning of period			353
New store openings			3
Acquired stores remaining open			—
Closed stores
Merged with existing stores			—
Sold or closed with no surviving store			36
Stores at end of period			320
Acquired stores closed and accounts merged with existing stores			—

Since March 31, 2010, the Company has added financial services to three existing rent-to-own store locations.

2009 Significant Item

Hilda Perez Matter. In connection with the court approved settlement of the Hilda Perez v. Rent-A-Center, Inc. matter in New Jersey, the Company previously recorded during the first quarter of 2009 a pre-tax credit in the amount of $3.0 million to account for cash payments to the Company representing undistributed monies in the settlement fund to which the Company is entitled pursuant to the terms of the settlement, as well as a refund of costs to administer the settlement previously paid by the Company which were not expended during the administration of the settlement. The $3.0 million pre-tax litigation credit increased net earnings per diluted share for the three month period ended March 31, 2009 by approximately $0.03.

- - -

Rent-A-Center, Inc. will host a conference call to discuss the first quarter results, guidance and other operational matters on Tuesday morning, April 27, 2010, 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 approximately 3,000 company-owned stores nationwide and in Canada and Puerto Rico. The stores generally offer high-quality, durable goods such as major consumer electronics, appliances, computers and furniture and accessories 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 franchiser of approximately 210 rent-to-own stores operating under the trade name of “ColorTyme.”

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 potential impact of any repurchases of common stock the Company may make, changes in outstanding indebtedness, or the potential impact of acquisitions or dispositions that may be completed after April 26, 2010.

SECOND QUARTER 2010 GUIDANCE:

Revenues

•		The Company expects total revenues to be in the range of $670 million to $685 million.
•		Store rental and fee revenues are expected to be between $588 million and $598 million.
•		Total store revenues are expected to be in the range of $662 million to $677 million.
•		Same store sales are expected to be approximately 1.0%.
•		The Company expects to open 5 to 10 new company-owned store locations.
•		The Company expects to add financial services to approximately 20 rent-to-own store locations.

Expenses

•		The Company expects cost of rental and fees to be between 22.1% and 22.5% of store rental and fee revenue and cost of merchandise sold to be between 73% and 77% 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 approximately 4.8% of total revenue.
•		Net interest expense is expected to be approximately $6 million and depreciation of property assets is expected to be approximately $16 million.
•		The effective tax rate is expected to be in the range of 37.5% to 38.0% of pre-tax income.
•		Diluted earnings per share are estimated to be in the range of $0.64 to $0.70.
•		Diluted shares outstanding are estimated to be between 66.4 million and 67.2 million.

FISCAL 2010 GUIDANCE:

Revenues

•		The Company expects total revenues to be in the range of $2.725 billion and $2.780 billion.
•		Store rental and fee revenues are expected to be between $2.335 billion and $2.380 billion.
•		Total store revenues are expected to be in the range of $2.693 billion and $2.748 billion.
•		Same store sales are expected to be in the 1.0% to 2.0% range.
•		The Company expects to open 25 to 35 new company-owned store locations.
•		The Company expects to add financial services to approximately 70 rent-to-own store locations.

Expenses

•		The Company expects cost of rental and fees to be between 22.2% and 22.6% of store rental and fee revenue and cost of merchandise sold to be between 72% and 76% of store merchandise sales.
•		Store salaries and other expenses are expected to be in the range of 56.7% to 58.2% of total store revenue.
•		General and administrative expenses are expected to be approximately 4.6% of total revenue.
•		Net interest expense is expected to be approximately $25 million and depreciation of property assets is expected to be approximately $64 million.
•		The effective tax rate is expected to be in the range of 37.5% to 38.0% of pre-tax income.
•		Diluted earnings per share are estimated to be in the range of $2.60 to $2.80.
•		Diluted shares outstanding are estimated to be between 66.5 million and 67.3 million.

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 rent-to-own stores; the Company’s ability to acquire additional rent-to-own stores or customer accounts on favorable terms; the Company’s ability to control costs and increase profitability; the Company’s ability to successfully add financial services locations within its existing rent-to-own stores; the Company’s ability to identify and successfully enter new lines of business offering products and services that appeal to its customer demographic; the Company’s ability to enhance the performance of acquired stores; the Company’s ability to retain the revenue associated with acquired customer accounts; the Company’s ability to identify and successfully market products and services that appeal to its customer demographic; the Company’s ability to enter into new and collect on its rental purchase agreements; the Company’s ability to enter into new and collect on its short-term loans; the passage of legislation adversely affecting the rent-to-own or financial services industries; the Company’s failure to comply with statutes or regulations governing the rent-to-own or financial services industries; interest rates; increases in the unemployment rate; economic pressures, such as high fuel and utility costs, affecting the disposable income available to the Company’s targeted consumers; changes in the Company’s stock price and the number of shares of common stock that it may or may not repurchase; changes in estimates relating to self-insurance liabilities and income tax and litigation reserves; changes in the Company’s effective tax rate; the Company’s ability to maintain an effective system of internal controls; changes in the number of share-based compensation grants, methods used to value future share-based payments and changes in estimated forfeiture rates with respect to share-based compensation; the resolution of material litigation; and the other risks detailed from time to time in the Company’s SEC reports, including but not limited to, its annual report on Form 10-K for the year ended December 31, 2009. 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.

Contact for Rent-A-Center, Inc.:

David E. Carpenter
Vice President of Investor Relations
(972) 801-1214
david.carpenter@rentacenter.com

Rent-A-Center, Inc. and Subsidiaries

STATEMENT OF EARNINGS HIGHLIGHTS

		Three Months Ended March 31,
		2010				2009				2009
						Before				After
						Significant Items				Significant Items
		(GAAP				(Non-GAAP				(GAAP
(In Thousands of Dollars, except per share data)		Earnings)				Earnings)				Earnings)
Total Revenue		$	718,419			$	728,183			$	728,183
Operating Profit			88,703				79,092				82,092	(1)
Net Earnings			51,461				43,515				45,376	(1)
Diluted Earnings per Common Share		$	0.77			$	0.65			$	0.68	(1)
Adjusted EBITDA		$	105,475			$	97,005			$	97,005
Reconciliation to Adjusted EBITDA:
Earnings Before Income Taxes		$	82,788			$	70,129			$	73,129
Add back:
Litigation Expense (Credit)			—				—				(3,000	)
Interest Expense, net			5,915				8,963				8,963
Depreciation of Property Assets			15,721				17,576				17,576
Amortization and Write-down of Intangibles			1,051				337				337
Adjusted EBITDA		$	105,475			$	97,005			$	97,005

SELECTED BALANCE SHEET HIGHLIGHTS

Selected Balance Sheet Data: (in Thousands of Dollars)		March 31, 2010				March 31, 2009
Cash and Cash Equivalents		$	84,498			$	195,948
Accounts Receivable			59,601				49,381
Prepaid Expenses and Other Assets			49,388				57,507
Rental Merchandise, net
On Rent			586,855				604,558
Held for Rent			181,984				166,703
Total Assets			2,439,868				2,548,071
Senior Debt			636,296				704,958
Subordinated Notes Payable			—				225,375
Total Liabilities			1,137,262				1,420,483
Stockholders’ Equity			1,302,606				1,127,588

Rent-A-Center, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF EARNINGS

		Three Months Ended March 31,
		2010				2009
(In Thousands of Dollars, except per share data)		Unaudited
Store Revenue
Rentals and Fees		$	583,848			$	597,607
Merchandise Sales			89,397				95,782
Installment Sales			15,137				12,426
Other			20,336				13,139
			708,718				718,954
Franchise Revenue
Franchise Merchandise Sales			8,425				7,958
Royalty Income and Fees			1,276				1,271
Total Revenue			718,419				728,183
Operating Expenses
Direct Store Expenses
Cost of Rentals and Fees			130,114				135,139
Cost of Merchandise Sold			61,811				65,767
Cost of Installment Sales			5,426				4,431
Salaries and Other Expenses			391,471				401,508
Franchise Cost of Merchandise Sold			8,068				7,634
			596,890				614,479
General and Administrative Expenses			31,775				34,275
Amortization and Write-down of Intangibles			1,051				337
Litigation Expense (Credit)			—				(3,000	)
Total Operating Expenses			629,716				646,091
Operating Profit			88,703				82,092
Interest Expense			6,083				9,232
Interest Income			(168	)			(269	)
Earnings Before Income Taxes			82,788				73,129
Income Tax Expense			31,327				27,753
NET EARNINGS			51,461				45,376
BASIC WEIGHTED AVERAGE SHARES			65,699				65,995
BASIC EARNINGS PER COMMON SHARE		$	0.78			$	0.69
DILUTED WEIGHTED AVERAGE SHARES			66,517				66,495
DILUTED EARNINGS PER COMMON SHARE		$	0.77			$	0.68