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		0-25370		45-0491516
(State or other jurisdiction of		(Commission File Number)		(IRS Employer Identification
incorporation or organization)				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 September 30, 2007.

     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.

     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 October 29, 2007.

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 October 29, 2007

Exhibit 99.1

For Immediate Release:

RENT-A-CENTER, INC. REPORTS
THIRD QUARTER 2007 RESULTS

Reported Diluted Earnings per Share of $0.37
Repurchased 2.3 Million Shares of Common Stock and Reduced Debt by $31.2 Million
Cash Flow from Operations Exceeds $270 Million for the Year to Date

Plano, Texas, October 29, 2007 — 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 September 30, 2007.

Third Quarter 2007 Results

The Company reported total revenues for the quarter ended September 30, 2007 of $709.7 million, an increase of $122.5 million from the reported total revenues of $587.2 million for the same period in the prior year. This 20.9% increase in revenues was primarily driven by the Rent-Way acquisition that closed on November 15, 2006. Same store revenues for the quarter ended September 30, 2007 decreased 1.8%.

Reported net earnings for the quarter ended September 30, 2007 were $25.3 million, an increase of $0.1 million or 0.4% from the reported net earnings of $25.2 million for the same period in the prior year.

Reported diluted earnings per share for the quarter ended September 30, 2007 were $0.37, an increase of $0.01, or 2.8% from the reported diluted earnings per share of $0.36 for the same period in the prior year. Reported net earnings per diluted share for the quarter ended September 30, 2007 includes $0.04 per share as a result of the receipt of accelerated royalty payments from former franchisees in consideration of the termination of their franchise agreements, as discussed below.

For the quarter ended September 30, 2007, the Company generated cash flow from operations of approximately $127.2 million, while ending the quarter with $100.3 million of cash on hand. During the quarter ended September 30, 2007, the Company repurchased 2,307,400 shares of its common stock for $45.1 million in cash under its common stock repurchase program. To date, the Company has repurchased a total of 18,235,950 shares and has utilized approximately $441.0 million of the $500.0 million authorized by its Board of Directors since the inception of the plan. In addition, during the quarter ended September 30, 2007, the Company reduced its outstanding indebtedness by approximately $31.2 million.

“Our third quarter financial results for total revenue and earnings per diluted share were within our guidance range; however, the business environment was very challenging throughout the quarter,” commented Mark E. Speese, the Company’s Chairman and Chief Executive Officer. “Although we believe that our customer continues to face financial challenges, we have been encouraged by the positive results from our operational initiatives, as well as an increase in demand in October,” Speese continued. “As we prepare to enter 2008, we intend to focus on enhancing store level operations, improving operational efficiencies, and further investing in our financial services business, while maintaining a solid balance sheet,” Speese stated.

The Company also announced today that it has reached a prospective settlement with the plaintiffs to resolve Terry Walker, et al. v. Rent-A-Center, Inc., et al., a putative class action filed in federal court in Texarkana, Texas, alleging that the Company and certain of its current and former officers and directors violated various federal securities laws. Under the terms contemplated, the Company anticipates its insurance carrier will pay an aggregate of approximately $3.6 million in cash, which will be distributed to an agreed upon class of claimants who purchased the Company’s common stock from April 25, 2001 through October 8, 2001, as well as used to pay costs of notice and settlement administration, and attorneys’ fees and expenses. In connection with the settlement, neither the Company nor any officer and director defendants are admitting liability for any securities laws violations.

The terms of the prospective settlement are subject to the parties entering into a definitive settlement agreement and obtaining court approval. While the Company 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. The Company expects its insurance carrier to fund the prospective settlement and related costs.

Nine Months Ended September 30, 2007 Results

Total reported revenues for the nine months ended September 30, 2007 were $2.189 billion, an increase of $0.411 billion, or 23.1% from the reported total revenues of $1.778 billion for the same period in the prior year. Same store revenues for the nine month period ending September 30, 2007 increased 1.4%.

Reported net earnings for the nine months ended September 30, 2007 were $81.6 million, a decrease of $23.8 million from the reported net earnings of $105.4 million for the same period in the prior year. This decrease is primarily a result of the $51.3 million litigation expense recorded in the first quarter of 2007 in connection with the settlement of the Perez matter, as discussed below.

Reported diluted earnings per share for the nine months ended September 30, 2007 were $1.16, a decrease of $0.33 from the reported diluted earnings per share of $1.49 for the same period in the prior year. The decrease in the reported diluted earnings per share for the nine months ended September 30, 2007 is primarily driven by the $0.47 per share effect for the Perez litigation settlement expense, as discussed below.

Through the nine month period ended September 30, 2007, the Company generated cash flow from operations of approximately $270.3 million. During the nine month period ended September 30, 2007, the Company repurchased 3,607,150 shares of its common stock for $80.1 million in cash under its common stock repurchase program. In addition, during the nine month period ended September 30, 2007, the Company reduced its outstanding indebtedness by approximately $91.5 million.

Operations Highlights

During the third quarter of 2007, the Company opened 10 new store locations, acquired one store as well as accounts from 24 additional locations, consolidated 24 stores into existing locations, and sold one store, for a net reduction of 14 stores and an ending balance as of September 30, 2007 of 3,361 company-owned stores. During the third quarter of 2007, the Company added financial services to 61 existing rent-to-own store locations, ending the quarter with a total of 282 stores providing these services.

Through the nine month period ended September 30, 2007, the Company opened 20 new store locations, acquired 14 stores as well as accounts from 30 additional locations, consolidated 76 stores into existing locations, and sold three stores, for a net reduction of 45 stores since December 31, 2006. Through the nine month period ending September 30, 2007, the Company added financial services to 148 existing rent-to-own store locations, consolidated seven stores with financial services into existing locations, and closed nine locations, for a net addition of 132 stores providing these services.

Since September 30, 2007, the Company has opened three new store locations and acquired accounts from one location. The Company has added financial services to four existing rent-to-own store locations since September 30, 2007.

2007 Significant Items

Settlement with ColorTyme Franchisees. On July 31, 2007, ColorTyme entered into a settlement agreement with five affiliated ColorTyme franchisees pursuant to which the franchise agreements with respect to approximately 65 ColorTyme stores were terminated. ColorTyme received a cash payment in satisfaction of the contractually required, future royalties owed to ColorTyme pursuant to the franchise agreements. This settlement payment increased diluted earnings per share by approximately $0.04 in both the third quarter of 2007 and for the nine month period ended September 30, 2007.

Hilda Perez. On September 14, 2007, the settlement of the Hilda Perez v. Rent-A-Center matter pending in New Jersey received final approval from the court. Under the terms of the settlement approved by the court, the Company agreed to pay an aggregate of approximately $85.8 million in cash, to be distributed to an agreed-upon class of its customers from April 23, 1999 through March 16, 2006. The Company also agreed to 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 settlement, the Company is entitled to 50% of any undistributed monies in the settlement. In connection with the settlement, the Company is not admitting liability for its past business practices in New Jersey. As previously reported, the Company recorded a pre-tax expense of $58.0 million in connection with the Perez matter during the fourth quarter of 2006, and an additional pre-tax charge of $51.3 million in the first quarter of 2007, to account for the aforementioned costs. The litigation expense with respect to the Perez settlement reduced diluted earnings per share by approximately $0.47 for the nine month period ended September 30, 2007.

The Company expects to fund the settlement with cash flow generated from operations, together with amounts available under its senior credit facilities, in the fourth quarter of 2007.

Rent-A-Center will host a conference call to discuss the third quarter results, guidance and other operational matters on Tuesday morning, October 30, 2007, 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 3,360 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, or the potential impact of acquisitions or dispositions that may be completed after October 29, 2007.

FOURTH QUARTER 2007 GUIDANCE:

Revenues

•

The Company expects total revenues to be in the range of $708 million to $723 million.

•

Store rental and fee revenues are expected to be between $638 million and $650 million.

•

Total store revenues are expected to be in the range of $700 million to $715 million.

•

Same store sales are expected to be flat.

•

The Company expects to open 5 - 10 new rent-to-own store locations.

•

The Company expects to add financial services to approximately 5 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 76% and 80% of store merchandise sales.

•

Store salaries and other expenses are expected to be in the range of 59.5% to 61.0% of total store revenue.

•

General and administrative expenses are expected to be between 4.3% and 4.5% of total revenue.

•

Net interest expense is expected to be approximately $21 million, depreciation of property assets is expected to be approximately $18 million and amortization of intangibles is expected to be approximately $4 million.

•

The effective tax rate is expected to be approximately 36.0% of pre-tax income.

•

Diluted earnings per share are estimated to be in the range of $0.38 to $0.44.

•

Diluted shares outstanding are estimated to be between 67.2 million and 68.2 million.

FISCAL 2008 GUIDANCE:

Revenues

•

The Company expects total revenues to be in the range of $2.920 billion and $2.960 billion.

•

Store rental and fee revenues are expected to be between $2.585 billion and $2.625 billion.

•

Total store revenues are expected to be in the range of $2.890 billion and $2.930 billion.

•

Same store sales are expected to be in the flat to 2% range.

•

The Company expects to open approximately 40 new rent-to-own store locations.

•

The Company 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 22.1% and 22.5% 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 58.5% to 60.0% of total store revenue.

•

General and administrative expenses are expected to be between 4.3% and 4.5% of total revenue.

•

Net interest expense is expected to be between $80 million and $85 million, depreciation of property assets is expected to be between $68 million and $73 million and amortization of intangibles is expected to be approximately $12 million.

•

The effective tax rate is expected to be approximately 37.0% of pre-tax income.

•

Diluted earnings per share are estimated to be in the range of $1.95 to $2.10.

•

Diluted shares outstanding are estimated to be between 67.5 million and 68.5 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 on favorable terms; the Company’s ability to identify and successfully enter new lines of business offering products and services that appeal to its customer demographic, including its financial services products; the Company’s ability to enhance the performance of acquired stores, including the Rent-Way stores acquired in November 2006; the Company’s ability to control costs; 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; interest rates; economic pressures affecting the disposable income available to the Company’s targeted consumers, such as high fuel and utility costs; 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 the Company’s litigation; the court hearing the Walker case could refuse to approve the settlement or could require changes to the settlement that are unacceptable to the Company or the plaintiffs; one or more parties filing an objection to the settlement of the Walker case; and the other risks detailed from time to time in our SEC reports, including but not limited to, the Company’s annual report on Form 10-K for the year ended December 31, 2006, and its quarterly reports for the quarters ended March 31, 2007, and June 30, 2007. 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
dcarpenter@racenter.com

Rent-A-Center, Inc. and Subsidiaries

STATEMENT OF EARNINGS HIGHLIGHTS

		Three Months Ended September 30,
		2007				2007				2006				2006
										Before				After
										Refinancing				Refinancing
		Before				After				Charge &				Charge &
		Royalty				Royalty				Legal				Legal
		Payment				Payment				Settlements				Settlements
(In Thousands of Dollars, except per share data)		(Non-GAAP)				(GAAP)				(Non-GAAP)				(GAAP)
Total Revenue		$	705,801			$	709,701	(1)		$	587,184			$	587,184
Operating Profit			56,675				60,575	(1)			67,171				51,871
Net Earnings			22,723				25,275	(1)			36,380				25,241	(2)(3)(4)
Diluted Earnings per Common Share		$	0.33			$	0.37	(1)		$	0.51			$	0.36	(2)(3)(4)
Adjusted EBITDA		$	78,656			$	78,656			$	81,666			$	81,666
Reconciliation to Adjusted EBITDA:
Earnings before income taxes			34,959				38,859				55,184				37,719
Add back:
Litigation settlement expense			—				—				—				15,300
Finance charge from refinancing			—				—				—				2,165
ColorTyme franchisees settlement			—				(3,900	)			—				—
Interest expense, net			21,716				21,716				11,987				11,987
Depreciation of property assets			18,028				18,028				13,486				13,486
Amortization of intangibles			3,953				3,953				1,009				1,009
Adjusted EBITDA		$	78,656			$	78,656			$	81,666			$	81,666

		Nine Months Ended September 30,
		2007				2007				2006				2006
		Before				After				Before				After
		Royalty				Royalty				Refinancing				Refinancing
		Payment &				Payment &				Charge &				Charge &
		Legal				Legal				Legal				Legal
		Settlement				Settlement				Settlements				Settlements
(In Thousands of Dollars, except per share data)		(Non-GAAP)				(GAAP)				(Non-GAAP)				(GAAP)
Total Revenue		$	2,185,258			$	2,189,158	(1)		$	1,777,782			$	1,777,782
Operating Profit			241,104				193,754	(1)(5)			217,848				202,548
Net Earnings			111,886				81,629	(1)(5)			116,551				105,412	(2)(3)(4)
Diluted Earnings per Common Share		$	1.59			$	1.16	(1)(5)		$	1.65			$	1.49	(2)(3)(4)
Adjusted EBITDA		$	305,635			$	305,635			$	261,172			$	261,172
Reconciliation to Adjusted EBITDA:
Earnings before income taxes			175,095				127,745				182,396				164,931
Add back:
Litigation settlement expense			—				51,250				—				15,300
Finance charge from refinancing			—				—				—				2,165
ColorTyme franchisees settlement			—				(3,900	)			—				—
Interest expense, net			66,009				66,009				35,452				35,452
Depreciation of property assets			52,606				52,606				40,479				40,479
Amortization of intangibles			11,925				11,925				2,845				2,845
Adjusted EBITDA		$	305,635			$	305,635			$	261,172			$	261,172

Selected Balance Sheet Data: (in Thousands of Dollars)		September 30, 2007				September 30, 2006
Cash and cash equivalents		$	100,337			$	53,706
Prepaid expenses and other assets			60,897				47,303
Rental merchandise, net
On rent			728,922				638,091
Held for rent			236,782				195,086
Total Assets			2,665,286				2,064,725
Senior debt			901,802				358,468
Subordinated notes payable			300,000				300,000
Total Liabilities			1,711,000				1,117,145
Stockholders’ Equity			954,286				947,580

Rent-A-Center, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF EARNINGS

		Three Months Ended September 30,
		2007				2006
(In Thousands of Dollars, except per share data)		Unaudited
Store Revenue
Rentals and Fees		$	631,132			$	532,260
Merchandise Sales			53,574				36,343
Installment Sales			8,593				6,798
Other			3,940				3,723
			697,239				579,124
Franchise Revenue
Franchisee Merchandise Sales			7,376				6,779
Royalty Income and Fees			5,086				1,281
Total Revenue			709,701				587,184
Operating Expenses
Direct Store Expenses
Cost of Rentals and Fees			140,219				117,018
Cost of Merchandise Sold			41,065				28,422
Cost of Installment Sales			2,822				2,856
Salaries and Other Expenses			422,294				340,379
Franchise Cost of Merchandise Sold			7,072				6,523
			613,472				495,198
General and Administrative Expenses			31,701				23,806
Amortization of Intangibles			3,953				1,009
Litigation Settlement Expense			—				15,300
Total Operating Expenses			649,126				535,313
Operating Profit			60,575				51,871
Finance Charges from Refinancing			—				2,165
Interest Expense			23,419				13,322
Interest Income			(1,703	)			(1,335	)
Earnings before Income Taxes			38,859				37,719
Income Tax Expense			13,584				12,478
NET EARNINGS			25,275				25,241
BASIC WEIGHTED AVERAGE SHARES			67,939				69,808
BASIC EARNINGS PER COMMON SHARE		$	0.37			$	0.36
DILUTED WEIGHTED AVERAGE SHARES			68,587				70,853
DILUTED EARNINGS PER COMMON SHARE		$	0.37			$	0.36

Rent-A-Center, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF EARNINGS

		Nine Months Ended September 30,
		2007				2006
(In Thousands of Dollars, except per share data)		Unaudited
Store Revenue
Rentals and Fees		$	1,953,341			$	1,579,719
Merchandise Sales			161,495				138,934
Installment Sales			24,649				18,377
Other			17,686				10,263
			2,157,171				1,747,293
Franchise Revenue
Franchisee Merchandise Sales			24,256				26,752
Royalty Income and Fees			7,731				3,737
Total Revenue			2,189,158				1,777,782
Operating Expenses
Direct Store Expenses
Cost of Rentals and Fees			429,215				344,518
Cost of Merchandise Sold			117,043				100,955
Cost of Installment Sales			9,496				7,677
Salaries and Other Expenses			1,260,135				1,012,263
Franchise Cost of Merchandise Sold			23,222				25,659
			1,839,111				1,491,072
General and Administrative Expenses			93,118				66,017
Amortization of Intangibles			11,925				2,845
Litigation Settlement Expense			51,250				15,300
Total Operating Expenses			1,995,404				1,575,234
Operating Profit			193,754				202,548
Finance Charges from Refinancing							2,165
Interest Expense			70,946				39,646
Interest Income			(4,937	)			(4,194	)
Earnings before Income Taxes			127,745				164,931
Income Tax Expense			46,116				59,519
NET EARNINGS			81,629				105,412
BASIC WEIGHTED AVERAGE SHARES			69,349				69,536
BASIC EARNINGS PER COMMON SHARE		$	1.18			$	1.52
DILUTED WEIGHTED AVERAGE SHARES			70,229				70,581
DILUTED EARNINGS PER COMMON SHARE		$	1.16			$	1.49