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

July 27, 2009

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 ended June 30, 2009.

     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 May 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 July 27, 2009.

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 July 27, 2009

Exhibit 99.1

For Immediate Release:

RENT-A-CENTER, INC. REPORTS
SECOND QUARTER 2009 RESULTS

Diluted Earnings per Share of $0.63
Cash Flow from Operations of Approximately $211 million Year-to-Date
2009 Diluted EPS Guidance Increased

Plano, Texas, July 27, 2009 — 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 June 30, 2009.

Second Quarter 2009 Results

Total revenues for the quarter ended June 30, 2009 were $679.6 million, a decrease of $39.4 million from total revenues of $719.0 million for the same period in the prior year. This anticipated decrease in revenues was primarily the result of a 6.2% reduction in same store sales, partially attributable to the 2007 store consolidation plan.

Net earnings and net earnings per diluted share for the quarter ended June 30, 2009 were $41.9 million and $0.63, respectively, as compared to $37.7 million and $0.56, respectively, for the same period in the prior year. Net earnings and net earnings per diluted share for the quarter ended June 30, 2009 include $1.9 million, or approximately $0.02 per share, as a result of a pre-tax litigation credit related to the Hilda Perez matter as discussed below.

When excluding the item above, adjusted net earnings per diluted share for the quarter ended June 30, 2009 were $0.61, as compared to net earnings per diluted share for the quarter ended June 30, 2008 of $0.56, an increase of 8.9%.

“We are pleased that our customer traffic in the quarter exceeded our expectations,” commented Mark E. Speese, the Company’s Chairman and Chief Executive Officer. “However, our average price per customer agreement was lower than expected in the second quarter, which we believe reflected our customer’s discretion in this difficult economy,” Speese stated. “Although our lower average price per customer agreement will impact our 2009 revenue forecast, we believe our expense management initiatives, focus on margin improvement and prudent use of cash will positively impact earnings for the year. As a result, we are increasing our guidance for 2009 diluted earnings per share to $2.32 to $2.42,” Speese ended.

Six Months Ended June 30, 2009 Results

Total revenues for the six months ended June 30, 2009 were $1.408 billion, a decrease of $68.0 million from total revenues of $1.476 billion for the same period in the prior year. This decrease in revenues was primarily the result of a 3.6% reduction in same store sales and the anticipated revenue attrition from approximately 375 stores that received customer agreements from stores closed in the 2007 restructuring plan.

Net earnings and net earnings per diluted share for the six months ended June 30, 2009 were $87.3 million and $1.31, respectively, as compared to $74.1 million and $1.10, respectively, for the same period in the prior year. Net earnings and net earnings per diluted share for the six months ended June 30, 2009 include $4.9 million, or approximately $0.04 per share, as a result of pre-tax litigation credits related to the Hilda Perez matter as discussed below.

Net earnings and net earnings per diluted share for the six months ended June 30, 2008 were reduced by $2.9 million, or approximately $0.03 per share, as a result of a pre-tax restructuring expense related to our 2007 restructuring plan as discussed below.

When excluding the items above, adjusted net earnings per diluted share for the six months ended June 30, 2009 were $1.27, as compared to adjusted net earnings per diluted share for the six months ended June 30, 2008 of $1.13, an increase of 12.4%.

Through the six month period ended June 30, 2009, the Company generated cash flow from operations of approximately $211.3 million, while ending the quarter with approximately $95.6 million of cash on hand. The Company utilized its cash flow from operations to reduce its outstanding indebtedness by approximately $170.9 million in 2009, or approximately 18% from year end 2008. As previously announced on June 10, 2009, the Company provided notice to The Bank of New York Mellon Trust Company, the indenture trustee, of its election to redeem its outstanding balance of $75.4 million in aggregate principal amount of its 7¹/2% Senior Subordinated Notes due May 2010, at a redemption price equal to 100% of the principal amount outstanding, plus accrued interest to the redemption date. The Company expects the redemption to occur on or about July 28, 2009. The Company expects to fund the redemption price primarily with cash flow generated from operations, together with amounts available under its senior credit facilities.

Operations Highlights

During the three and six month periods ended June 30, 2009, the company-owned stores and financial services locations changed as follows:

		Three Months Ended				Six Months Ended
		June 30, 2009				June 30, 2009
Company-Owned Stores
Stores at beginning of period			3,038				3,037
New store openings			8				18
Acquired stores remaining open			—				—
Closed stores
Merged with existing stores			24				32
Sold or closed with no surviving store			1				2
Stores at end of period			3,021				3,021
Acquired stores closed and accounts merged with existing stores			5				12
Financial Services
Stores at beginning of period			351				351
New store openings			2				2
Acquired stores remaining open			—				—
Closed stores
Merged with existing stores			3				3
Sold or closed with no surviving store			—				—
Stores at end of period			350				350
Acquired stores closed and accounts merged with existing stores			1				1

Since June 30, 2009, the Company has opened eight new store locations, acquired one store as well as accounts from two additional locations and sold eight stores. The Company has added financial services to one existing rent-to-own location and consolidated one store with financial services into an existing location since June 30, 2009.

Significant Items

Litigation Credit Related to the Hilda Perez Matter. In November 2007, the Company 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, Inc. matter in New Jersey. Under the terms of the settlement, the Company is entitled to 50% of any undistributed monies in the settlement fund. The Company previously recorded during the fourth quarter of 2008 a pre-tax credit in the amount of $2.7 million and an additional pre-tax credit in the amount of $3.0 million in the first quarter of 2009, 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. During the second quarter of 2009, the Company recorded an additional $1.9 million pre-tax credit to account for cash payments to the Company representing additional 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 $1.9 million pre-tax credit in the second quarter of 2009 increased net earnings per diluted share by approximately $0.02. Through the six month period ended June 30, 2009, the total pre-tax credit of approximately $4.9 million increased net earnings per diluted share by approximately $0.04.

Restructuring Plan Expenses. During the first quarter of 2008, the Company recorded a pre-tax restructuring expense of approximately $2.9 million in connection with the restructuring plan previously announced on December 3, 2007. This restructuring expense reduced net earnings per diluted share by approximately $0.03 in the first quarter of 2008 and for the six month period ended June 30, 2008. As previously reported, the Company recorded a pre-tax restructuring expense of approximately $38.7 million related to this restructuring plan during the fourth quarter of 2007. The costs with respect to these store closings relate primarily to lease terminations, fixed asset disposals and other miscellaneous items.

– – –

Rent-A-Center, Inc. will host a conference call to discuss the second quarter results, guidance and other operational matters on Tuesday morning, July 28, 2009, 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 3,020 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 220 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, reduction in outstanding indebtedness, or the potential impact of acquisitions or dispositions that may be completed after July 27, 2009.

THIRD QUARTER 2009 GUIDANCE:

Revenues

•		The Company expects total revenues to be in the range of $666 million to $681 million.
•		Store rental and fee revenues are expected to be between $573 million and $585 million.
•		Total store revenues are expected to be in the range of $657 million to $672 million.
•		Same store sales are expected to be in the range of down 4% to down 6%.
•		The Company expects to open 10 to 15 new company-owned store locations.

Expenses

•		The Company expects cost of rental and fees to be between 22.4% and 22.8% of store rental and fee revenue and cost of merchandise sold to be between 71.0% and 75.0% of store merchandise sales.
•		Store salaries and other expenses are expected to be in the range of 58.4% to 59.9% of total store revenue.
•		General and administrative expenses are expected to be approximately 5% of total revenue.
•		Net interest expense is expected to be approximately $5 million and depreciation of property assets is expected to be approximately $17 million.
•		The effective tax rate is expected to be approximately 38% of pre-tax income.
•		Diluted earnings per share are estimated to be in the range of $0.46 to $0.52.
•		Diluted shares outstanding are estimated to be between 66.3 million and 67.1 million.

FISCAL 2009 GUIDANCE:

Revenues

•		The Company expects total revenues to be in the range of $2.750 billion and $2.780 billion.
•		Store rental and fee revenues are expected to be between $2.340 billion and $2.370 billion.
•		Total store revenues are expected to be in the range of $2.710 billion and $2.740 billion.
•		Same store sales are expected to be in the range of down 2% to down 4%.
•		The Company expects to open 30 to 40 new company-owned store locations.

Expenses

•		The Company expects cost of rental and fees to be between 22.4% and 22.8% of store rental and fee revenue and cost of merchandise sold to be between 71.0% and 75.0% 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 approximately 5% of total revenue.
•		Net interest expense is expected to be approximately $28 million and depreciation of property assets is expected to be between $65 million and $70 million.
•		The effective tax rate is expected to be approximately 38% of pre-tax income.
•		Diluted earnings per share are estimated to be in the range of $2.32 to $2.42.
•		Diluted shares outstanding are estimated to be between 66.3 million and 67.1 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, including its financial services products; 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 any 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, 2008, and its quarterly report for the quarter ended March 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 June 30,
		2009				2009				2008
		Before				After
		Significant Items				Significant Items
		(Non-GAAP				(GAAP				(GAAP
(In Thousands of Dollars, except per share data)		Earnings)				Earnings)				Earnings)
Total Revenue		$	679,609			$	679,609			$	719,031
Operating Profit			73,414				75,283	(1)			74,434	(2)
Net Earnings			40,795				41,945	(1)			37,741
Diluted Earnings per Common Share		$	0.61			$	0.63	(1)		$	0.56
Adjusted EBITDA		$	91,477			$	91,477			$	96,271
Reconciliation to Adjusted EBITDA:
Earnings Before Income Taxes		$	65,636			$	67,505			$	59,984
Add back:
Restructuring Expense (Credit)			—				—				(15	)
Litigation Expense (Credit)			—				(1,869	)			—
Interest Expense, net			7,778				7,778				14,450
Depreciation of Property Assets			16,557				16,557				18,190
Amortization and Write-down of Intangibles			1,506				1,506				3,662
Adjusted EBITDA		$	91,477			$	91,477			$	96,271

		Six Months Ended June 30,
		2009				2009				2008				2008
		Before				After				Before				After
		Significant Items				Significant Items				Significant Items				Significant Items
		(Non-GAAP				(GAAP				(Non-GAAP				(GAAP
(In Thousands of Dollars, except per share data)		Earnings)				Earnings)				Earnings)				Earnings)
Total Revenue		$	1,407,792			$	1,407,792			$	1,475,667			$	1,475,667
Operating Profit			152,506				157,375	(3)			154,859				151,974	(4)
Net Earnings			84,310				87,321	(3)			75,902				74,099	(4)
Diluted Earnings per Common Share		$	1.27			$	1.31	(3)		$	1.13			$	1.10	(4)
Adjusted EBITDA		$	188,482			$	188,482			$	199,829			$	199,829
Reconciliation to Adjusted EBITDA:
Earnings Before Income Taxes		$	135,765			$	140,634			$	121,346			$	118,461
Add back:
Restructuring Expense (Credit)			—				—				—				2,885
Litigation Expense (Credit)			—				(4,869	)			—				—
Interest Expense, net			16,741				16,741				33,513				33,513
Depreciation of Property Assets			34,133				34,133				36,378				36,378
Amortization and Write-down of Intangibles			1,843				1,843				8,592				8,592
Adjusted EBITDA		$	188,482			$	188,482			$	199,829			$	199,829

SELECTED BALANCE SHEET HIGHLIGHTS

Selected Balance Sheet Data: (in Thousands of Dollars)		June 30, 2009				June 30, 2008
Cash and Cash Equivalents		$	95,595			$	75,100
Accounts Receivable			56,660				46,033
Prepaid Expenses and Other Assets			52,252				54,411
Rental Merchandise, net
On Rent			571,902				676,607
Held for Rent			179,857				204,472
Total Assets			2,427,744				2,538,780
Senior Debt			700,769				788,011
Subordinated Notes Payable			75,375				270,375
Total Liabilities			1,256,763				1,517,374
Stockholders’ Equity			1,170,981				1,021,406

Rent-A-Center, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF EARNINGS

		Three Months Ended June 30,
		2009				2008
(In Thousands of Dollars, except per share data)		Unaudited
Store Revenue
Rentals and Fees		$	589,468			$	634,618
Merchandise Sales			56,959				55,703
Installment Sales			12,290				9,246
Other			13,443				10,589
			672,160				710,156
Franchise Revenue
Franchise Merchandise Sales			6,251				7,650
Royalty Income and Fees			1,198				1,225
Total Revenue			679,609				719,031
Operating Expenses
Direct Store Expenses
Cost of Rentals and Fees			132,956				145,511
Cost of Merchandise Sold			41,997				45,167
Cost of Installment Sales			4,259				3,790
Salaries and Other Expenses			384,910				406,572
Franchise Cost of Merchandise Sold			5,975				7,234
			570,097				608,274
General and Administrative Expenses			34,592				32,676
Amortization and Write-down of Intangibles			1,506				3,662
Litigation Expense (Credit)			(1,869	)			—
Restructuring Expense (Credit)			—				(15	)
Total Operating Expenses			604,326				644,597
Operating Profit			75,283				74,434
Interest Expense			8,045				16,739
Interest Income			(267	)			(2,289	)
Earnings before Income Taxes			67,505				59,984
Income Tax Expense			25,560				22,243
NET EARNINGS			41,945				37,741
BASIC WEIGHTED AVERAGE SHARES			66,028				66,684
BASIC EARNINGS PER COMMON SHARE		$	0.64			$	0.57
DILUTED WEIGHTED AVERAGE SHARES			66,647				67,360
DILUTED EARNINGS PER COMMON SHARE		$	0.63			$	0.56

Rent-A-Center, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF EARNINGS

		Six Months Ended June 30,
		2009				2008
(In Thousands of Dollars, except per share data)		Unaudited
Store Revenue
Rentals and Fees		$	1,187,075			$	1,275,304
Merchandise Sales			152,741				141,042
Installment Sales			24,716				19,131
Other			26,582				20,208
			1,391,114				1,455,685
Franchise Revenue
Franchise Merchandise Sales			14,209				17,417
Royalty Income and Fees			2,469				2,565
Total Revenue			1,407,792				1,475,667
Operating Expenses
Direct Store Expenses
Cost of Rentals and Fees			268,095				291,673
Cost of Merchandise Sold			107,764				108,492
Cost of Installment Sales			8,690				7,810
Salaries and Other Expenses			786,418				823,986
Franchise Cost of Merchandise Sold			13,609				16,630
			1,184,576				1,248,591
General and Administrative Expenses			68,867				63,625
Amortization and Write-down of Intangibles			1,843				8,592
Litigation Expense (Credit)			(4,869	)			—
Restructuring Expense (Credit)			—				2,885
Total Operating Expenses			1,250,417				1,323,693
Operating Profit			157,375				151,974
Interest Expense			17,277				37,666
Interest Income			(536	)			(4,153	)
Earnings before Income Taxes			140,634				118,461
Income Tax Expense			53,313				44,362
NET EARNINGS			87,321				74,099
BASIC WEIGHTED AVERAGE SHARES			66,012				66,697
BASIC EARNINGS PER COMMON SHARE		$	1.32			$	1.11
DILUTED WEIGHTED AVERAGE SHARES			66,571				67,267
DILUTED EARNINGS PER COMMON SHARE		$	1.31			$	1.10