================================================================================ 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 Date of Report (Date of earliest event reported): October 27, 2003 ---------- RENT-A-CENTER, INC. (Exact name of registrant as specified in charter)
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. Not applicable. (b) PRO FORMA FINANCIAL INFORMATION. Not applicable. (c) EXHIBITS 99.1 Press release, dated October 27, 2003. ITEM 12. 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 September 30, 2003. 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 and the indenture governing its 7 1/2% Senior Subordinated Notes due 2010. 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. All of the information in this Form 8-K and the accompanying exhibit shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended. -2-
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. RENT-A-CENTER, INC. Date: October 27, 2003 By: /s/ ROBERT D. DAVIS ---------------------------------------------- Robert D. Davis Senior Vice President - Finance, Treasurer and Chief Financial Officer
EXHIBIT INDEX
EXHIBIT 99.1 For Immediate Release: RENT-A-CENTER, INC. REPORTS THIRD QUARTER 2003 RESULTS DILUTED EARNINGS PER SHARE RISE 23.9% SAME STORE SALES INCREASE 3.4% BOARD APPROVES NEW $100 MILLION SHARE REPURCHASE PROGRAM ------------------------- PLANO, TEXAS, OCTOBER 27, 2003 -- Rent-A-Center, Inc. (the "Company") (NASDAQ/NNM:RCII), the leading rent-to-own operator in the U.S., today announced revenues and net earnings for the quarter ended September 30, 2003. The Company, the nation's largest rent-to-own operator, reported net earnings for the quarter ended September 30, 2003 of $48.5 million, or $0.57 per diluted share, when excluding the non-recurring finance charge of approximately $7.5 million associated with finalizing the Company's recapitalization program, an increase of 23.9% from the same quarter of the prior year. Total revenues for the quarter ended September 30, 2003 increased to $549.8 million as compared to $494.6 million for the same quarter of the prior year. Incremental revenues generated in new and acquired stores, as well as growth in same store revenues primarily drove this 11.2% increase. Same store revenues during the third quarter of 2003 increased 3.4% above the comparable quarter of 2002. The Company's quarterly growth in net earnings resulted primarily from the increase of revenues as outlined above, as well as the benefits associated with the Company's recapitalization program. Net earnings for the nine months ended September 30, 2003 were $151.7 million, or $1.72 per diluted share, when excluding the non-recurring finance charge of approximately $35.3 million associated with the recapitalization program, an increase of 19.5% over the net earnings of $127.0 million, or $1.39 per diluted share for the same period in the prior year. Total revenues for the nine months ended September 30, 2003 increased to $1.669 billion from $1.488 billion in 2002, representing an increase of 12.2%. Same store revenues for the nine-month period ending September 30, 2003 increased 3.9%. "We are pleased to be reporting earnings within our expectations," commented Mark E. Speese, the Company's Chairman and Chief Executive Officer, "and are excited about our opportunities in 2004. While the child tax credit refunds led to increased payouts and lower units on rent in August and September," continued Mr. Speese, "the fourth quarter has begun with positive momentum, which we believe positions us for our continued growth." During the third quarter of 2003, the Company opened 27 new store locations and acquired 13 stores as well as accounts from nine additional locations. Through the nine month period ending September 30, 2003, the Company opened 65 new stores, acquired a total of 143 others as well as accounts from 199 additional locations while consolidating 15 stores into existing locations. To date through the fourth quarter, the Company has opened three new store locations, acquired two stores and accounts from two additional locations. The Company's cash flow from operations was $117.2 million for the third quarter of 2003 and $300.6 million for the nine months ended September 30, 2003. The Company also announced that its board of directors has authorized a new $100 million share repurchase program. "We continue to believe that the growth potential of this company and the industry as a whole is significant," Speese commented, "and that our strong recurring cash flow continues to allow us to pursue our growth initiatives, as well as to think and act strategically in managing our capital structure for the benefit of all of our stakeholders." Rent-A-Center will host a conference call to discuss the third quarter financial results on Tuesday morning, October 28, 2003, at 10:45 a.m. EST. 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 2,605 company-owned stores nationwide and in 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 franchiser of 327 rent-to-own stores, 315 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 potential impact of share repurchases that may be completed after October 27, 2003. FOURTH QUARTER 2003 GUIDANCE: REVENUES o The Company expects total revenues to be in the range of $555 million to $560 million. o Store rental and fee revenues are expected to be between $500 million and $504 million. o Total store revenues are expected to be in the range of $540 million to $545 million. o Same store sales increases are expected to be in the 1% to 3% range. o The Company expects to open 20-30 new store locations. EXPENSES o The Company expects depreciation of rental merchandise to be between 21.6% and 22.0% of store rental and fee revenue and cost of goods merchandise sales to be between 75% and 80% of store merchandise sales. o Store salaries and other expenses are expected to be in the range of 55.0% to 56.0% of total store revenue. o General and administrative expenses are expected to be between 3.0% and 3.2% of total revenue. o Net interest expense is expected to be approximately $9.0 million and amortization of intangibles is expected to be approximately $3.0 million. o The effective tax rate is expected to be approximately 37.25% of pre-tax income. o Diluted earnings per share are estimated to be in the range of $0.60 to $0.61. o Diluted shares outstanding are estimated to be between 83.6 million and 84.4 million. FISCAL 2004 GUIDANCE: REVENUES o The Company expects total revenues to be in the range of $2.300 billion and $2.330 billion. o Store rental and fee revenues are expected to be between $2.065 billion and $2.090 billion. o Total store revenues are expected to be in the range of $2.250 billion and $2.278 billion. o Same store sales increases are expected to be in the 1% to 3% range. o The Company expects to open approximately 80 to 120 new store locations. EXPENSES o The Company expects depreciation of rental merchandise to be between 21.6% and 22.0% of store rental and fee revenue and cost of goods merchandise sales to be between 75% and 80% of store merchandise sales. o Store salaries and other expenses are expected to be in the range of 54.0% to 55.5% of total store revenue. o General and administrative expenses are expected to be between 3.0% and 3.2% of total revenue. o Net interest expense is expected to be between $34.0 million and $38.0 million and amortization of intangibles is expected to be approximately $6.5 million. o The effective tax rate is expected to be between 37.5% and 38.0% of pre-tax income. o Diluted earnings per share are estimated to be in the range of $2.62 to $2.70. o Diluted shares outstanding are estimated to be between 84.0 million and 86.0 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 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, including the stores acquired in the Rent-Way acquisition; 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; 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 for the year ended December 31, 2002, its quarterly report on Form 10-Q for the quarter ended March 31, 2003 and its quarterly report on Form 10-Q for the quarter ended June 30, 2003. 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. CONTACTS FOR RENT-A-CENTER, INC.:
RENT-A-CENTER, INC. AND SUBSIDIARIES STATEMENT OF EARNINGS HIGHLIGHTS (In Thousands of Dollars, except per share data)
RENT-A-CENTER, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS
RENT-A-CENTER, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS