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 incorporation or organization)		(Commission File Number)		(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 and year ended December 31, 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 February 4, 2008.

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 February 4, 2008

Exhibit 99.1

For Immediate Release:

RENT-A-CENTER, INC. REPORTS
FOURTH QUARTER AND YEAR END 2007 RESULTS

Same Store Sales Increase 1.0% for the Quarter
Cash Flow from Operations Exceeds $240 Million for 2007
Announces Prospective Settlement of Shafer/Johnson Matter

Plano, Texas, February 4, 2008 — 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 and year ended December 31, 2007.

Fourth Quarter 2007 Results

The Company reported total revenues for the quarter ended December 31, 2007 of $717.0 million, an increase of $60.9 million from the reported total revenues of $656.1 million for the same period in the prior year. This 9.3% increase in revenues was primarily driven by the Rent-Way acquisition that closed on November 15, 2006. Same store revenues for the quarter ended December 31, 2007 increased 1.0%.

Reported net loss for the quarter ended December 31, 2007 was $5.4 million, as compared to the reported net loss of $2.3 million for the same period in the prior year. Reported net earnings for the quarter ended December 31, 2007 were reduced by a $38.7 million pre-tax restructuring expense related to our previously announced store consolidation plan and other restructuring items and an $11.0 million pre-tax litigation charge related to the prospective settlement of the Shafer/Johnson matter, as discussed below. Reported net earnings for the quarter ended December 31, 2006 were reduced by a $58.0 million pre-tax litigation charge related to the Hilda Perez matter and a $2.6 million pre-tax refinancing expense as discussed below.

Reported diluted loss per share for the quarter ended December 31, 2007 was $0.08, as compared to the reported diluted loss per share of $0.03 for the same period in the prior year. Reported diluted earnings per share for the quarter ended December 31, 2007 were reduced by $0.39 per share as a result of the restructuring expense related to our previously announced store consolidation plan and other restructuring items and an additional $0.11 per share as a result of the litigation expense related to the prospective settlement of the Shafer/Johnson matter, as discussed below. Adjusted diluted earnings per share were $0.42, when excluding the restructuring expense related to our previously announced store consolidation plan and other restructuring items and the litigation expense, as discussed below. Reported net earnings per diluted share for the quarter ended December 31, 2006 were reduced by $0.51 per share as a result of the litigation expense related to the Hilda Perez matter and an additional $0.02 per share as a result of refinancing expenses, as discussed below.

“We are generally pleased with the results for the fourth quarter, where we saw positive same store sales and total revenue and adjusted diluted earnings per share that was within our guidance range. At the same time, the business environment remains uncertain,” commented Mark E. Speese, the Company’s Chairman and Chief Executive Officer. “In 2008, we intend to focus on the execution of our previously announced store consolidation plan, devote resources to the overall customer experience in our stores, enhance store level operations, improve operational efficiencies, and further invest in our financial services business, while continuing to generate significant cash flow from operations and maintaining a solid balance sheet,” Speese stated.

The Company also announced today that it has reached a prospective settlement with the plaintiffs to resolve the Eric Shafer et al. v. Rent-A-Center, Inc. and Victor E. Johnson et al. v. Rent-A-Center, Inc. coordinated matters pending in state court in Los Angeles, California. These matters allege violations by the Company of certain wage and hour laws of California. Under the terms contemplated, the Company anticipates it will pay an aggregate of $11.0 million in cash, including settlement costs and plaintiff’s attorneys’ fees, to be distributed to an agreed-upon class of Company employees from May 1998 through March 31, 2008. The Company would be entitled to any settlement fund monies not distributed under the terms of the prospective settlement. In connection with the prospective settlement, the Company is not admitting liability for its wage and hour practices in California. To account for the aforementioned costs, the Company recorded a pre-tax charge of $11.0 million in the fourth 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 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.

Year End December 31, 2007 Results

Total reported revenues for the twelve months ended December 31, 2007 were $2.906 billion, an increase of $0.472 billion from the reported total revenues of $2.434 billion for the same period in the prior year. This 19.4% increase in revenues was primarily driven by the Rent-Way acquisition that closed on November 15, 2006. Same store revenues for the twelve month period ending December 31, 2007 increased 2.1%.

Reported net earnings for the twelve months ended December 31, 2007 were $76.3 million, a decrease of $26.8 million from the reported net earnings of $103.1 million for the same period in the prior year. Reported net earnings for the twelve months ended December 31, 2007 were reduced by a $38.7 million pre-tax restructuring expense related to our previously announced store consolidation plan and other restructuring items, an $11.0 million pre-tax litigation charge related to the prospective settlement of the Shafer/Johnson matter and a $51.3 million pre-tax litigation charge related to the Hilda Perez matter, and were increased by a $3.9 million pre-tax benefit as a result of the receipt of accelerated royalty payments from franchisees in consideration of the termination of their franchise agreements, as discussed below. Reported net earnings for the twelve months ended December 31, 2006 were reduced by an aggregate of $73.3 million in pre-tax litigation expenses, and an aggregate of $4.8 million in pre-tax refinancing expenses, as discussed below.

Reported diluted earnings per share for the twelve months ended December 31, 2007 were $1.10, a decrease of $0.36 from the reported diluted earnings per share of $1.46 for the same period in the prior year. Reported diluted earnings per share for the twelve months ended December 31, 2007 were reduced by $0.37 per share as a result of the restructuring expense related to our previously announced store consolidation plan and other restructuring items, an additional $0.10 per share as a result of the litigation charge related to the prospective settlement of the Shafer/Johnson matter and $0.48 per share as a result of the litigation charge related to the Hilda Perez matter, and were increased by $0.04 per share as a result of the receipt of accelerated royalty payments from franchisees in consideration of the termination of their franchise agreements, as discussed below. Reported net earnings per diluted share for the twelve months ended December 31, 2006 were reduced by $0.65 per share as a result of litigation expenses and an additional $0.04 per share as a result of refinancing expenses, as discussed below.

Through the twelve month period ended December 31, 2007, the Company generated cash flow from operations of approximately $240.4 million, while ending the year with $97.4 million of cash on hand. During the twelve month period ended December 31, 2007, the Company repurchased 3,832,150 shares of its common stock for $83.4 million in cash under its common stock repurchase program. To date, the Company has repurchased a total of 18,460,950 shares and has utilized approximately $444.3 million of the $500.0 million authorized by its Board of Directors since the inception of the plan. In addition, during the twelve month period ended December 31, 2007, the Company reduced its outstanding indebtedness by approximately $33.9 million. Since

December 31, 2007, the Company has further reduced its outstanding indebtedness by approximately $60.0 million.

Operations Highlights

During the fourth quarter of 2007, the Company opened seven new store locations, acquired accounts from four locations, and consolidated 287 stores into existing locations, for a net reduction of 280 stores and an ending balance as of December 31, 2007 of 3,081 company-owned stores. During the fourth quarter of 2007, the Company added financial services to nine existing rent-to-own store locations, acquired accounts from two locations, consolidated 14 stores with financial services into existing locations, and closed one location, ending the quarter with a total of 276 stores providing these services.

Through the twelve month period ended December 31, 2007, the Company opened 27 new store locations, acquired 14 stores as well as accounts from 34 additional locations, consolidated 363 stores into existing locations, and sold three stores, for a net reduction of 325 stores since December 31, 2006. Through the twelve month period ending December 31, 2007, the Company added financial services to 157 existing rent-to-own store locations, acquired accounts from two locations, consolidated 21 stores with financial services into existing locations, and closed 10 locations, for a net addition of 126 stores providing these services.

Since December 31, 2007, the Company has opened one new store location, acquired accounts from two locations, consolidated four stores into existing locations, and sold four stores. The Company has added financial services to four existing rent-to-own store locations and closed two locations since December 31, 2007.

2007 Significant Items

Shafer/Johnson. In the fourth quarter of 2007, the Company recorded a pre-tax expense of $11.0 million related to the prospective settlement of the Eric Shafer et al. v. Rent-A-Center, Inc. and Victor E. Johnson et al. v. Rent-A-Center, Inc. coordinated matters pending in state court in Los Angeles, as discussed above. This litigation expense reduced diluted earnings per share in the fourth quarter of 2007 by $0.11 and for the twelve month period ended December 31, 2007 by $0.10.

Store Consolidation Plan Expenses. During the fourth quarter of 2007, the Company recorded a pre-tax restructuring expense of approximately $38.7 million related to the store consolidation plan and other restructuring items announced on December 3, 2007. The costs with respect to these store closings relate primarily to lease terminations, fixed asset disposals and other miscellaneous items. This restructuring expense reduced diluted earnings per share in the fourth quarter of 2007 by $0.39 and for the twelve month period ended December 31, 2007 by $0.37.

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 for the twelve month period ended December 31, 2007.

Hilda Perez. On November 5, 2007, we paid an aggregate of $109.3 million, including plaintiffs’ attorneys’ fees and administration costs, pursuant to the court approved settlement of the Hilda Perez v. Rent-A-Center matter pending in New Jersey. Under the terms of the settlement, the Company is entitled to 50% of any undistributed monies in the settlement. 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 $0.48 for the twelve month period ended December 31, 2007.

2006 Significant Items

2006 Litigation Expense

Hilda Perez. During the fourth quarter of 2006, the Company recorded a pre-tax expense of $58.0 million related to the Hilda Perez v. Rent-A-Center matter. This litigation expense reduced diluted earnings per share by approximately $0.51 in the fourth quarter of 2006 and $0.52 for the twelve month period ended December 31, 2006.

Burdusis/French/Corso. In the first quarter of 2007, we paid approximately $4.95 million, including attorneys’ fees, pursuant to the court approved settlement with the plaintiffs to resolve the Jeremy Burdusis, et al. v. Rent-A-Center, Inc., et al./Israel French, et al. v. Rent-A-Center, Inc. and Kris Corso, et al. v. Rent-A-Center, Inc. coordinated matters pending in state court in Los Angeles, California. The Company recorded a pre-tax expense of $4.95 million in the third quarter of 2006 to account for the settlement amount and attorneys’ fees. This litigation expense reduced diluted earnings per share by approximately $0.04 for the twelve month period ended December 31, 2006.

California Attorney General. As announced on October 30, 2006, the Company reached a settlement with the California Attorney General to resolve the inquiry received in the second quarter of 2004 regarding the Company’s business practices in California with respect to its cash prices and its membership program. As part of the settlement, the Company agreed to pay restitution to certain customers in the aggregate amount of approximately $9.6 million. The Company is in the process of finalizing the terms of the restitution program with the California Attorney General and expects to fund the restitution account as soon as reasonably practicable following the finalization of such terms. To account for the settlement costs, as well as the Company’s attorneys’ fees, the Company recorded a pre-tax charge of $10.35 million in the third quarter of 2006. The litigation expense with respect to the California Attorney General settlement reduced diluted earnings per share by approximately $0.09 for the twelve month period ended December 31, 2006.

2006 Refinancing Expense

2006 Senior Credit Facility Refinancing Expenses. During the third quarter of 2006, the Company recorded a pre-tax expense of approximately $2.2 million to write off the remaining unamortized balance of financing costs from our previous credit agreement closed in July 2004. This refinancing expense reduced diluted earnings per share by approximately $0.02 for the twelve month period ended December 31, 2006.

During the fourth quarter of 2006, the Company re-financed its credit agreement in connection with the RentWay acquisition and recorded a pre-tax expense of approximately $2.6 million to write off the remaining unamortized balance of financing costs from our previous credit agreement closed in July 2006. This refinancing expense reduced diluted earnings per share by approximately $0.02 in both the fourth quarter of 2006 and for the twelve month period ended December 31, 2006.

-    -    -

Rent-A-Center will host a conference call to discuss the fourth quarter results, guidance and other operational matters on Tuesday morning, February 5, 2008, 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 3,080 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 215 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 February 4, 2008.

FIRST QUARTER 2008 GUIDANCE:

Revenues

•

The Company expects total revenues to be in the range of $738 million to $753 million.

•

Store rental and fee revenues are expected to be between $632 million and $644 million.

•

Total store revenues are expected to be in the range of $727 million to $742 million.

•

Same store sales are expected to be in the flat to 1% range.

•

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

•

The Company expects to add financial services to approximately 10 rent-to-own store locations.

Expenses

•

The Company expects cost of rental and fees to be between 22.6% and 23.0% of store rental and fee revenue and cost of merchandise sold to be between 68% and 72% of store merchandise sales.

•

Store salaries and other expenses are expected to be in the range of 56.8% to 58.3% of total store revenue.

•

General and administrative expenses are expected to be between 4.2% and 4.4% 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 37.0% of pre-tax income.

•

Diluted earnings per share are estimated to be in the range of $0.47 to $0.53.

•

Diluted shares outstanding are estimated to be between 66.8 million and 67.8 million.

FISCAL 2008 GUIDANCE:

Revenues

•

The Company expects total revenues to be in the range of $2.868 billion and $2.908 billion.

•

Store rental and fee revenues are expected to be between $2.515 billion and $2.555 billion.

•

Total store revenues are expected to be in the range of $2.830 billion and $2.870 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 150 — 200 rent-to-own store locations.

Expenses

•

The Company expects cost of rental and fees to be between 22.6% and 23.0% 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 57.0% to 58.5% 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 $70 million and $75 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 $2.17 to $2.32.

•

Diluted shares outstanding are estimated to be between 67.0 million and 68.0 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 additional costs and expenses that could be incurred in connection with the store consolidation plan; 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; 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; the negotiation of and entry into definitive settlement documentation with respect to the prospective settlement of the Shafer/Johnson matter; one or more parties filing an objection to the prospective Shafer/Johnson settlement; a specified percentage of class members timely and validly opt out of the prospective Shafer/Johnson settlement; the court hearing the Shafer/Johnson case could refuse to approve the prospective settlement or could require changes to the prospective settlement that are unacceptable to the Company or the plaintiffs; 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, June 30, 2007 and September 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 December 31,
		2007				2007				2006				2006
		Before				After				Before				After
		Restructuring				Restructuring				Litigation				Litigation
		Expense &				Expense &				Expense &				Expense &
		Litigation				Litigation				Refinancing				Refinancing
		Expense				Expense				Expense				Expense
(In Thousands of Dollars, except per share data)		(Non-GAAP)				(GAAP)				(Non-GAAP)				(GAAP)
Total Revenue		$	716,963			$	716,963			$	656,126			$	656,126
Operating Profit			60,196				10,483	(1,2)			77,396				19,396
Net Earnings			28,071				(5,361	) (1,2)			35,596				(2,320	) (3)(4)
Diluted Earnings per Common Share		$	0.42			$	(0.08	) (1,2)		$	0.50			$	(0.03	) (3)(4)
Adjusted EBITDA		$	82,679			$	82,679			$	95,296			$	95,296
Reconciliation to Adjusted EBITDA:
Earnings before income taxes			38,254				(11,459	)			59,845				(793	)
Add back:
Litigation expense			—				11,000				—				58,000
Refinancing expense			—				—				—				2,638
Restructuring expense			—				38,713				—				—
Interest expense, net			21,942				21,942				17,551				17,551
Depreciation of property assets			18,674				18,674				15,172				15,172
Amortization of intangibles			3,809				3,809				2,728				2,728
Adjusted EBITDA		$	82,679			$	82,679			$	95,296			$	95,296

		Twelve Months Ended December 31,
		2007				2007				2006				2006
		Before Royalty				After Royalty
		Payment,				Payment,				Before				After
		Litigation				Litigation				Litigation				Litigation
		Expense, &				Expense, &				Expenses &				Expenses &
		Restructuring				Restructuring				Refinancing				Refinancing
		Expense				Expense				Expense				Expense
(In Thousands of Dollars, except per share data)		(Non-GAAP)				(GAAP)				(Non-GAAP)				(GAAP)
Total Revenue		$	2,902,221			$	2,906,121	(5)		$	2,433,908			$	2,433,908
Operating Profit			301,300				204,237	(1)(2)(5)(6)			295,244				221,944
Net Earnings			139,957				76,268	(1)(2)(5)(6)			152,147				103,092	(3)(4)(7)(8)(9)
Diluted Earnings per Common Share		$	2.01			$	1.10	(1)(2)(5)(6)		$	2.15			$	1.46	(3)(4)(7)(8)(9)
Adjusted EBITDA		$	388,313			$	388,313			$	356,468			$	356,468
Reconciliation to Adjusted EBITDA:
Earnings before income taxes			213,349				116,286				242,241				164,138
Add back:
Litigation expense			—				62,250				—				73,300
Refinancing expense			—				—				—				4,803
Franchisees royalty payment			—				(3,900	)			—				—
Restructuring expense			—				38,713				—				—
Interest expense, net			87,951				87,951				53,003				53,003
Depreciation of property assets			71,279				71,279				55,651				55,651
Amortization of intangibles			15,734				15,734				5,573				5,573
Adjusted EBITDA		$	388,313			$	388,313			$	356,468			$	356,468

Note: See footnotes on next page

Selected Balance Sheet Data: (in Thousands of Dollars)		December 31, 2007				December 31, 2006
Cash and cash equivalents		$	97,375			$	92,344
Prepaid expenses and other assets			56,384				54,068
Rental merchandise, net
On rent			735,672				816,762
Held for rent			202,298				239,471
Total Assets			2,626,943				2,740,956
Senior debt			959,335				993,278
Subordinated notes payable			300,000				300,000
Total Liabilities			1,679,852				1,797,997
Stockholders’ Equity			947,091				942,959

Rent-A-Center, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF EARNINGS

		Three Months Ended December 31,
		2007				2006
(In Thousands of Dollars, except per share data)		Unaudited
Store Revenue
Rentals and Fees		$	640,720			$	594,520
Merchandise Sales			47,494				37,020
Installment Sales			9,927				8,500
Other			7,796				5,344
			705,937				645,384
Franchise Revenue
Franchisee Merchandise Sales			9,973				9,625
Royalty Income and Fees			1,053				1,117
Total Revenue			716,963				656,126
Operating Expenses
Direct Store Expenses
Cost of Rentals and Fees			144,798				131,944
Cost of Merchandise Sold			39,460				30,473
Cost of Installment Sales			3,774				3,669
Salaries and Other Expenses			424,830				373,174
Franchise Cost of Merchandise Sold			9,511				9,203
			622,373				548,463
General and Administrative Expenses			30,585				27,539
Amortization of Intangibles			3,809				2,728
Litigation Expense			11,000				58,000
Restructuring Expense			38,713				—
Total Operating Expenses			706,480				636,730
Operating Profit			10,483				19,396
Refinancing Expense			—				2,638
Interest Expense			23,832				18,913
Interest Income			(1,890	)			(1,362	)
Earnings before Income Taxes			(11,459	)			(793	)
Income Tax Expense			(6,098	)			1,527
NET EARNINGS			(5,361	)			(2,320	)
BASIC WEIGHTED AVERAGE SHARES			66,779				70,095
BASIC EARNINGS PER COMMON SHARE		$	(0.08	)		$	(0.03	)
DILUTED WEIGHTED AVERAGE SHARES			67,213				71,191
DILUTED EARNINGS PER COMMON SHARE		$	(0.08	)		$	(0.03	)

Rent-A-Center, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF EARNINGS

		Twelve Months Ended December 31,
		2007				2006
(In Thousands of Dollars, except per share data)		Unaudited
Store Revenue
Rentals and Fees		$	2,594,061			$	2,174,239
Merchandise Sales			208,989				175,954
Installment Sales			34,576				26,877
Other			25,482				15,607
			2,863,108				2,392,677
Franchise Revenue
Franchisee Merchandise Sales			34,229				36,377
Royalty Income and Fees			8,784				4,854
Total Revenue			2,906,121				2,433,908
Operating Expenses
Direct Store Expenses
Cost of Rentals and Fees			574,013				476,462
Cost of Merchandise Sold			156,503				131,428
Cost of Installment Sales			13,270				11,346
Salaries and Other Expenses			1,684,965				1,385,437
Franchise Cost of Merchandise Sold			32,733				34,862
			2,461,484				2,039,535
General and Administrative Expenses			123,703				93,556
Amortization of Intangibles			15,734				5,573
Litigation Expense			62,250				73,300
Restructuring Expense			38,713				—
Total Operating Expenses			2,701,884				2,211,964
Operating Profit			204,237				221,944
Refinancing Expense			—				4,803
Interest Expense			94,778				58,559
Interest Income			(6,827	)			(5,556	)
Earnings before Income Taxes			116,286				164,138
Income Tax Expense			40,018				61,046
NET EARNINGS			76,268				103,092
BASIC WEIGHTED AVERAGE SHARES			68,706				69,676
BASIC EARNINGS PER COMMON SHARE		$	1.11			$	1.48
DILUTED WEIGHTED AVERAGE SHARES			69,475				70,733
DILUTED EARNINGS PER COMMON SHARE		$	1.10			$	1.46