Rainbow Rentals Reports Results for 2003 Third Quarter and Nine Months

Rainbow Rentals Reports Results for 2003 Third Quarter and Nine Months 


CANFIELD, Ohio, Oct. 29  /PRNewswire-FirstCall/ -- Rainbow Rentals, Inc.  today
reported financial results for its third quarter and nine months ended September
30, 2003.

Revenue for the quarter was $25.4 million, up 4.5 percent from $24.3 million for
the comparable period of 2002. Revenue at comparable stores (opened on or before
July 1, 2002) was up 1.1 percent. The increase in comparable store revenue was
primarily the result of growth in stores opened in 2002, offset by lower
seasonal rentals of air conditioners, the discontinued rental of accessory items
and promotional offers that lowered initial rental rates.

Net income for the quarter was $217,000, or $0.04 per share, compared to net
income of $335,000, or $0.06 per share, in the third quarter of 2002.  The
results were adversely affected by costs associated with six new stores opened
during the year (including two stores opened during the quarter), increased
expenses at comparable stores and higher general and administrative expenses,
which offset an increase in comparable store revenues and continued improvements
in gross rental margins.

"Although we were disappointed in the bottom-line results of our seasonally slow
third quarter, we are pleased that our clearance initiative positioned us well
for the fourth quarter, our busiest quarter of the year," said Wayland J.
Russell, chairman and chief executive officer. "New products in our stores now
represent a larger portion of our inventory, which should make us more
competitive in the fourth quarter.  We also continued to benefit from better
purchasing.

"We are making several administrative changes to reduce expenses and improve
customer response. Customer service responsibilities have been shifted from the
home office to the regional managers. Additionally, we anticipate utilizing
outside contractors, as needed, for new stores and remodeling in lieu of
maintaining our own construction department."

For the nine months ended September 30, 2003, revenue was $77.0 million, up 3.8
percent from the $74.1 million for the comparable period of 2002. Revenue at
comparable stores (opened on or before January 1, 2002) was down 0.8 percent.
Net income for the nine months was $926,000 or $0.16 per share, compared to net
income of $1.3 million, or $0.23, per share for the comparable period in 2002.

Rainbow offers brand name, full-featured appliances, electronics, computers and
furniture at 125 rental-purchase stores in 15 states -- Connecticut, Georgia,
Indiana, Kentucky, Maryland, Massachusetts, Michigan, New York, North Carolina,
Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee and Virginia.
Rainbow also accepts product orders by phone and at its website, located at
http://www.rainbowrentals.com/ . Established in 1986, Rainbow is headquartered
in Canfield, Ohio, and employs nearly 900 associates.

Statements in this release, other than those concerning historical information,
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, and are made pursuant to the "safe
harbor" provisions of the Securities Act of 1933 and the Securities Exchange Act
of 1934. Forward-looking statements are based on management's current beliefs
and assumptions regarding future events and operating performance and speak only
as of the date of this release. These statements are likely to address growth
strategy, future financial performance, strategic initiatives, marketing and
expansion plans and the impact of operating initiatives. Forward-looking
statements are subject to a number of risks, uncertainties and other factors,
many of which are outside of the control of the company that could cause actual
results to differ materially from those expressed or implied. These factors
include risks associated with general economic conditions, failure to execute
business plans, unforeseen issues beyond the company's control, greater than
expected expenses associated with company activities, effects of adopting new
accounting pronouncements and other risk factors as described in the company's
annual 10-K report and other filings with the Securities and Exchange
Commission. The company undertakes no obligation to publicly update or revise
any forward-looking statements, whether as a result of new information, future
events or otherwise.

                            RAINBOW RENTALS, INC.
                             STATEMENTS OF INCOME
               (Dollars in thousands, except per share amounts)

                                      (unaudited)           (unaudited)
                                  For the three months  For the nine months
                                         ended                 ended
                                     September 30,         September 30,
                                    2003       2002       2003       2002
  Revenues
    Rental revenue                 $24,017    $22,921    $72,474    $69,523
    Fees                               681        699      1,996      2,052
    Merchandise sales                  739        724      2,487      2,570
         Total revenues             25,437     24,344     76,957     74,145

  Operating expenses
    Merchandise costs                8,347      8,355     25,101     25,562
    Store expenses
      Salaries and related           6,674      6,055     19,801     17,863
      Occupancy                      2,481      2,539      7,458      7,090
      Advertising                    1,324      1,310      4,800      4,586
      Other expenses                 3,875      3,318     10,965     10,123
         Total store expenses       14,354     13,222     43,024     39,662

         Total merchandise costs
          and store expenses        22,701     21,577     68,125     65,224

    General and administrative
     expenses                        2,138      1,962      6,561      5,794
    Amortization of intangible
     assets                             45         45        135        130
         Total operating
          expenses                  24,884     23,584     74,821     71,148

         Operating income              553        760      2,136      2,997

  Interest expense                     137        135        434        487
  Other expense, net                    57         57        171        171
         Income from continuing
          operations,
         before income taxes           359        568      1,531      2,339

  Income tax expense                   142        207        605        924

         Income from continuing
          operations                   217        361        926      1,415

  Discontinued operations
    Loss from operations of
     discontinued store, net of
     tax                               -          (26)       -          (76)

         Net income                   $217       $335       $926     $1,339

  Basic earnings per common
   share:
    Basic earnings per share
     from continuing operations      $0.04      $0.06      $0.16      $0.24
    Basic loss per share from
     discontinued operations           -          -          -        (0.01)
         Basic earnings per
          share                      $0.04      $0.06      $0.16      $0.23

  Diluted earnings per common
   share:
    Diluted earnings per share
     from continuing operations      $0.04      $0.06      $0.16      $0.24
    Diluted loss per share from
     discontinued operations           -          -          -        (0.01)
         Diluted earnings per
          share                      $0.04      $0.06      $0.16      $0.23

  Weighted average common shares
   outstanding:
    Basic                        5,929,319  5,929,319  5,929,319  5,927,564

    Diluted                      5,938,185  5,932,648  5,933,255  5,944,081


DATASOURCE: Rainbow Rentals, Inc.



CONTACT:  Nancy Davis of Rainbow Rentals, Inc., [phone],

ext. 121, or email, ; or Dan Pecchia of Innis

Maggiore Group, [phone], or email,  



Web site:  http://www.rainbowrentals.com/ 

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