Rent-Way Reports Fiscal 2005 Second Quarter Financial Results

Rent-Way Reports Fiscal 2005 Second Quarter Financial Results



ERIE, Pa., May 5  /PRNewswire-FirstCall/ -- Rent-Way, Inc. (NYSE:RWY) today
reported financial results for the three and six months ended March 31, 2005. 
The results reported are restated to reflect the Company's review of its lease
accounting practices and its method of recognizing rental business revenues as
discussed below.

For the second quarter, the Company reported revenues of $136.2 million versus
$135.3 million in the same quarter last year.  Revenues from the Company's core
rental business (which excludes the Company's dPi Teleconnect unit) were $131.6
million versus $128.7 million in the same quarter last year. Same store rental
business revenue increased 1.4% versus last year's quarter. Operating income in
the quarter was $14.3 million, compared to $15.1 million in the same period
last year.  Net income was $6.3 million, compared to $6.6 million in the second
quarter last year.  Net income allocable to common shareholders was $5.8
million or $0.19 per share versus $6.2 million last year or $0.22 per share. 
Net income for the quarter gives effect to a non-cash $610 thousand FAS 133
gain related to the conversion feature of the Company's preferred stock.

"Our management team has done an excellent job executing our growth plans. We
nicely exceeded our guidance in revenue and operating income," stated William
Morgenstern, Rent-Way's Chairman.  "In the quarter we also opened 12 new stores
and we expect to open 8 - 10 more by the end of the current quarter.  Our new
stores, which we define as stores open less than 15 months, collectively
continue to perform ahead of plan and our store opening plan remains on
course," concluded Mr. Morgenstern.

William McDonnell, Rent-Way's Vice President and CFO, stated, "For the quarter,
our core stores revenue and operating income were $130.4 million and $16.7
million, respectively, and our core stores with new stores revenue and
operating income were $131.6 million and $14.3 million, respectively.  For both
core stores and core stores with new stores, we exceeded our guidance for the
quarter.  As we look forward to the next two quarters, based on current
business trends, we reiterate our guidance for revenue and operating income
ranges.  We anticipate comparable store sales for the June and September
quarters to be in the positive 3-4% range," concluded Mr. McDonnell.

The Company ended the quarter with $18.0 million outstanding on its bank
revolver, down from $22.0 million at March 31, 2004.  The Company reported
EBITDA for the quarter of $18.2 million versus $19.2 million in the same
quarter last year.  EBITDA as defined by the Company is operating income plus
depreciation of property and equipment and amortization of goodwill and other
intangibles.  The Company believes EBITDA provides investors useful information
regarding its ability to service its debt and generate cash for other purposes,
including for capital expenditures and working capital.  The Company reported
net cash provided by operations for the quarter of $14.0 million versus $22.0
million in the same quarter last year.

Reconciliations of the non-GAAP measures mentioned above to the nearest
comparable GAAP measures are presented in the chart of supplemental information
attached to this release.

In light of announcements made by many public companies regarding lease related
accounting and a February 7, 2005, letter by the SEC to the American Institute
of Certified Public Accountants, the Company reviewed its lease accounting
practices with its independent registered public accounting firm. As a result,
the Company has corrected its accounting for leases and will be restating the
financial results contained in its most recent Form 10-Q for the quarter ended
December 31, 2004, and its Form 10-K for the fiscal year ended September 30,
2004, and those financial statements should no longer be relied upon.  More
specifically, the Company is correcting its computation of depreciation of
leasehold improvements, its treatment of "free rent" or "rent holidays" offered
by landlords at the commencement of a lease and its classification of landlord
allowances related to leasehold improvements.  The Company has also determined
to give effect to its previously announced change in recognizing rental
business revenues in periods prior to September 30, 2004.  Effective October 1,
2004, the Company began to record revenues over the rental term rather than as
collected.  The cumulative net impact of this change was $2.6 million at
October 1, 2004, and was recorded in Other Expense in the quarter ended
December 31, 2004.  This adjustment will be reversed and will now be recorded
in Revenues and Operating Expenses for prior periods.

The impact of the restatements on the Company's consolidated statements of
operations was an increase in revenues of $0.3 million for the quarter ended
March 31, 2004, and a decrease in operating and net income of $0.5 million and
$0.2 million for the quarters ended March 31, 2005 and 2004, respectively. The
impact of the restatements on the Company's consolidated statements of
operations was a decrease in revenues of $0.1 million and a decrease in
operating and net income of $0.5 million for the six months ended March 31,
2004 and a decrease in operating income of $1.3 million and an increase in net
income of $1.2 million for the six months ended March 31, 2005.

The impact on the Company's March 31, 2005, consolidated balance sheet was a
decrease in property and equipment, net of $3.7 million, an increase in other
liabilities of $0.9 million, and an increase in accumulated deficit of $4.6
million.  The impact on the Company's September 30, 2004, consolidated balance
sheet was an increase in rental merchandise, net of $0.8 million, a decrease in
property and equipment, net of $2.5 million, an increase in other assets of
$2.2 million, an increase in other liabilities of $6.3 million, and an increase
in accumulated deficit of $5.8 million.

The company will file amendments to its 2004 Form 10-K and its December 31,
2004, Form 10-Q containing restated financial statements.

About Rent-Way

Rent-Way is one of the nation's largest operators of rental-purchase stores. 
Rent-Way rents quality name brand merchandise such as home entertainment
equipment, computers, furniture and appliances from 780 stores in 34 states.

Safe-Harbor Statements

This news release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995.  These statements contain the
words "projects," "anticipates," "believes," "expects," "intends," "will,"
"may" and similar words and expressions.  Each such statement is subject to
uncertainties, risks and other factors that could cause actual results or
performance to differ materially from the results or performance expressed in
or implied by such statements.  The forward-looking statements in this news
release that contain projections of the company's expected financial
performance and other projections regarding future performance are inherently
subject to change given the nature of projections and the company's actual
performance may be better or worse than projected.  Uncertainties, risks and
other factors that may cause actual results or performance to differ materially
from any results or performance expressed or implied by forward- looking
statements in this news release include:  (1) the company's ability to control
its operating expenses and to realize operating efficiencies, (2) the company's
ability to develop, implement and maintain adequate and reliable internal
accounting systems and controls, (3) the company's ability to retain existing
senior management and to attract additional management employees, (4) general
economic and business conditions, including demand for the company's products
and services, (5) general conditions relating to the rental-purchase industry,
including the impact of state and federal laws regulating or otherwise
affecting the rental-purchase transaction, (6) competition in the
rental-purchase industry, including competition with traditional retailers, (7)
the company's ability to make principal and interest payments on its high level
of outstanding debt, and (8) the company's ability to open new stores and cause
those new stores to operate profitably.  A discussion of other risk factors
that may cause actual results to differ from the results expressed in or
implied by these forward-looking statements can be found in the company's
filing with the SEC.  The company disclaims any duty to provide updates to the
forward-looking statements made in this news release.

                               RENT-WAY, INC.
                         SELECTED BALANCE SHEET DATA
                         (all dollars in thousands)

                                          March 31, 2005  September 30, 2004
                                            (unaudited)       (unaudited)
                                                                Restated

  Cash and cash equivalents                       $3,445            $3,412
  Prepaid expenses                                 9,633             8,496
  Rental merchandise, net                        196,550           173,930
  Total Assets                                   459,181           431,128

  Accounts payable                                25,100            26,187
  Debt                                           221,116           203,934
  Total Liabilities                              321,965           302,101
  Shareholders' Equity                           115,575           109,237



                                RENT-WAY, INC.
                    CONSOLIDATED STATEMENTS OF OPERATIONS
               (all dollars in thousands except per share data)

                                             For the three months ended
                                                     March 31,
                                               2005              2004
                                           (unaudited)       (unaudited)
                                                               Restated
  Revenues:
     Rental revenue                      $114,199   83.8%  $111,251   82.2%
     Prepaid phone service revenue          4,742    3.5%     6,884    5.1%
     Other revenues                        17,257   12.7%    17,188   12.7%

  Total Revenues                          136,198  100.0%   135,323  100.0%

  Costs and operating expenses:
     Depreciation and amortization:
        Rental merchandise                 36,005   26.4%    37,151   27.5%
        Property and equipment              3,902    2.9%     4,039    3.0%
        Amortization of intangibles            28    0.0%       110    0.1%
     Cost of prepaid phone service          2,871    2.1%     4,952    3.7%
     Salaries and wages                    34,764   25.5%    33,711   24.9%
     Advertising, net                       4,733    3.5%     4,272    3.2%
     Occupancy                              9,289    6.8%     8,452    6.2%
     Restructuring costs                      -      0.0%       -      0.0%
     Other operating expenses              30,305   22.3%    27,562   20.4%
           Total costs and operating
            expenses                      121,897   89.5%   120,249   88.9%

           Operating income                14,301   10.5%    15,074   11.1%

  Other income (expense):
  Interest expense                         (7,291)  -5.4%    (7,662)  -5.7%
  Interest income                               7    0.0%        14    0.0%
  Amortization and write-off of deferred
   financing costs                           (285)  -0.2%      (264)  -0.2%
  Other income (expense), net               1,025    0.8%     1,228    0.9%
        Income before income taxes and
         discontinued operations            7,757    5.7%     8,390    6.2%

  Income tax expense                        1,395    1.0%     1,395    1.0%

  Income before discontinued operations     6,362    4.7%     6,995    5.2%

  Loss from discontinued operations           (53)   0.0%      (437)  -0.3%

  Net income                               $6,309    4.6%    $6,558    4.8%

  Preferred stock dividend and accretion
   of preferred stock                        (534)  -0.4%      (403)  -0.3%

  Net income (loss) allocable to common
   shareholders                            $5,775    4.2%    $6,155    4.5%

  Earnings (loss) per common share:
      Basic earnings (loss) per common
       share
          Income before discontinued
           operations                       $0.24             $0.27
          Net income (loss) allocable to
           common shareholders              $0.22             $0.24

      Diluted earnings (loss) per common
       share
          Income before discontinued
           operations                       $0.19             $0.23
          Net income (loss) allocable to
           common shareholders              $0.19             $0.22

  Weighted average common shares
   outstanding:
      Basic                                26,244            26,172
      Diluted                              29,992            30,026



                                RENT-WAY, INC.
                    CONSOLIDATED STATEMENTS OF OPERATIONS
               (all dollars in thousands except per share data)

                                              For the six months ended
                                                     March 31,
                                               2005              2004
                                           (unaudited)       (unaudited)
                                             Restated          Restated
  Revenues:
     Rental revenue                      $220,141   83.9%  $213,304   82.5%
     Prepaid phone service revenue          9,304    3.5%    13,073    5.1%
     Other revenues                        33,050   12.6%    32,129   12.4%

  Total Revenues                          262,495  100.0%   258,506  100.0%

  Costs and operating expenses:
     Depreciation and amortization:
        Rental merchandise                 68,521   26.1%    69,921   27.0%
        Property and equipment              8,413    3.2%     8,406    3.3%
        Amortization of intangibles            56    0.0%       224    0.1%
     Cost of prepaid phone service          5,777    2.2%     8,931    3.5%
     Salaries and wages                    69,584   26.5%    67,317   26.0%
     Advertising, net                      10,085    3.8%    10,401    4.0%
     Occupancy                             18,349    7.0%    16,867    6.5%
     Restructuring costs                      -      0.0%        48    0.0%
     Other operating expenses              56,247   21.4%    53,162   20.6%
           Total costs and operating
            expenses                      237,032   90.3%   235,277   91.0%

           Operating income                25,463    9.7%    23,229    9.0%

  Other income (expense):
  Interest expense                        (14,358)  -5.5%   (15,521)  -6.0%
  Interest income                              14    0.0%       784    0.3%
  Amortization and write-off of deferred
   financing costs                           (566)  -0.2%      (522)  -0.2%
  Other income (expense), net                (239)  -0.1%    (3,093)  -1.2%
        Income before income taxes and
         discontinued operations           10,314    3.9%     4,877    1.9%

  Income tax expense                        2,790    1.1%     2,790    1.1%

  Income before discontinued operations     7,524    2.9%     2,087    0.8%

  Loss from discontinued operations          (181)  -0.1%    (1,710)  -0.7%

  Net income                               $7,343    2.8%      $377    0.1%

  Preferred stock dividend and accretion
   of preferred stock                      (1,069)  -0.4%      (798)  -0.3%

  Net income (loss) allocable to common
   shareholders                            $6,274    2.4%     $(421)  -0.2%

  Earnings (loss) per common share:
      Basic earnings (loss) per common
       share
          Income before discontinued
           operations                       $0.29             $0.08
          Net income (loss) allocable to
           common shareholders              $0.24            $(0.02)

      Diluted earnings (loss) per common
       share
          Income before discontinued
           operations                       $0.28             $0.08
          Net income (loss) allocable to
           common shareholders              $0.23            $(0.02)

  Weighted average common shares
   outstanding:
      Basic                                26,244            26,125
      Diluted                              26,728            26,125



   Calculation of EBITDA and Reconciliation of Net Cash Provided by
   Operations to EBITDA For the Three Months Ended March 31, 2005 and 2004
   (all dollars in thousands)

                                                Three Months Ended
                                            03/31/05          03/31/04
                                          (unaudited)       (unaudited)
  Calculation of EBITDA

  Operating income                               $14,301           $15,074
  Depreciation - property and equipment            3,902             4,039
  Amortization of intangibles                         28               110

  EBITDA                                         $18,231           $19,223


  Reconciliation of Net Cash Provided by Operations to EBITDA

                                                   Three Months Ended
                                               03/31/05          03/31/04
                                             (unaudited)       (unaudited)

  Net cash provided by operating activities      $14,044           $21,987
  Net cash used in discontinued operations            53               437
  Adjustments to reconcile net income to net
   cash provided by operating activities         (40,749)          (42,875)
  Changes in assets and liabilities               32,961            27,009
  Depreciation - property and equipment            3,902             4,039
  Amortization of intangibles                         28               110
  Interest expense                                 7,291             7,662
  Interest income                                     (7)              (14)
  Amortization and write off of deferred
   financing costs                                   285               264
  Other expense                                   (1,025)           (1,228)
  Income taxes                                     1,395             1,395
  Loss from discontinued operations                   53               437
  EBITDA                                         $18,231           $19,223



                                RENT-WAY, INC.
         RECONCILIATION OF CORE STORES REVENUES AND OPERATING INCOME
                  For the Three Months Ended March 31, 2005
                          (all dollars in thousands)

                                                                   Operating
                                                Revenues            Income

  Rent-Way, Inc., as reported                    $136,198           $14,301

  New store revenues and operating loss            (1,212)            2,420

  DPI revenues and operating income                (4,742)               37

  DPI commissions                                     190               (30)

  Core stores revenues and operating income      $130,434           $16,728


DATASOURCE: Rent-Way, Inc.



CONTACT:  CONTACT:  Bill McDonnell, CFO of Rent-Way, Inc.,

[phone]



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

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