Rent-Way Reports Fiscal 2005 Third Quarter Financial Results

Share Name	Share Symbol	Market	Type
Rent Way	NYSE:RWY	NYSE	Ordinary Share

Rent Way (NYSE:RWY)
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New Store Opening Program On Track ERIE, Pa., Aug. 4 /PRNewswire-FirstCall/ -- Rent-Way, Inc. (NYSE:RWY) today reported financial results for the three and nine months ended June 30, 2005. For the third quarter, the Company reported revenues of $128.3 million versus $124.9 million in the same quarter last year. Revenues from the Company's core rental business (which excludes the Company's dPi Teleconnect unit) were $124.2 million versus $118.5 million in the same quarter last year, an increase of 4.8%. Same store rental business revenues increased 2.6% versus last year's quarter. Operating income in the quarter was $12.3 million, compared to $12.3 million in the same period last year. Excluding operating losses of $2.6 million related to the new store opening program, operating income would have been $14.9 million, or a 21 percent increase over the prior year. Reported operating income benefited from retrospective insurance adjustments of $1.9 million in this quarter and $1.8 million in last year's quarter. As a result of the increase in the Company's stock price in the quarter, the Company recorded a $5.0 million FAS 133 charge related to the conversion feature of the Company's preferred stock versus income of $0.2 million in the same quarter last year. Giving effect to this charge results in the Company incurring a net loss of $1.2 million in the quarter, compared to net income of $4.9 million in the third quarter last year. Net loss allocable to common shareholders was $1.8 million or $(0.07) per diluted share versus net income allocable to common shareholders of $4.4 million last year or $0.16 per diluted share. Without the FAS 133 charge, net income and net income allocable to common shareholders in the quarter would have been $3.8 million and $3.2 million, respectively. "The fundamentals of our business are sound and our plan to invest in growing the Rent-Way brand by 40 - 50 stores per year for the next several years is working," stated Bill Short, Rent-Way's President. "We opened 9 new stores in the quarter and we expect to open 10 more by the end of September, which would mean 42 new stores opened in fiscal 2005. We're pleased with the top line revenue performance of these new stores. Our cash flow is strong, our team is solid and I remain very optimistic about 2006 and beyond," concluded Mr. Short. William McDonnell, Rent-Way's Vice President and CFO, stated, "For the quarter, our core stores revenue and operating income, were $121.4 million and $13.2 million, respectively, and our core stores with new stores revenue and operating income, were $124.2 million and $10.6 million, respectively. Higher payoffs and a slight fall off in deliveries during the quarter reduced our agreements on rent more than we had anticipated. Nonetheless, we met our guidance for core store revenue and operating income. Looking forward, our results for the full fiscal year will be in line with our guidance, however we expect revenue and operating income will be slightly below guidance for the fourth quarter," concluded Mr. McDonnell. The Company ended the quarter with $32.0 million outstanding on its bank revolver. The Company reported EBITDA for the quarter of $16.2 million versus $16.2 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 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 used in operations for the quarter of $8.4 million versus cash provided by operations of $3.6 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. 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 786 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 filings 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) June 30, 2005 September 30, 2004 (unaudited) (unaudited) Restated Cash and cash equivalents $3,887 $3,412 Prepaid expenses 9,774 8,496 Rental merchandise, net 197,967 173,929 Total Assets 463,723 431,128 Accounts payable 17,309 26,187 Debt 234,211 203,934 Total Liabilities 323,054 302,101 Shareholders' Equity 113,908 109,237 RENT-WAY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (all dollars in thousands except per share data) For the three months ended June 30, 2005 2004 (unaudited) (unaudited) Restated Revenues: Rental revenue $108,455 84.5% $103,211 82.6% Prepaid phone service revenue 4,313 3.4% 6,602 5.3% Other revenues 15,529 12.1% 15,069 12.1% Total Revenues 128,297 100.0% 124,882 100.0% Costs and operating expenses: Depreciation and amortization: Rental merchandise 31,949 24.9% 31,429 25.2% Property and equipment 3,732 2.9% 3,836 3.1% Amortization of intangibles 195 0.2% 86 0.1% Cost of prepaid phone service 2,684 2.1% 4,075 3.3% Salaries and wages 35,580 27.7% 33,192 26.6% Advertising, net 5,438 4.2% 4,986 4.0% Occupancy 9,526 7.4% 8,560 6.9% Restructuring costs - 0.0% - 0.0% Other operating expenses 26,886 21.0% 26,392 21.1% Total costs and operating expenses 115,990 90.4% 112,556 90.1% Operating income 12,307 9.6% 12,326 9.9% Other income (expense): Interest expense (7,304) -5.7% (7,398) -5.9% Interest income 9 0.0% 9 0.0% Amortization of deferred financing costs (289) -0.2% (227) -0.2% Other income (expense), net (4,362) -3.4% 1,600 1.3% Income before income taxes and discontinued operations 361 0.3% 6,310 5.1% Income tax expense 1,395 1.1% 1,395 1.1% Income (loss) before discontinued operations (1,034) -0.8% 4,915 3.9% Loss from discontinued operations (181) -0.1% (12) 0.0% Net income (loss) $(1,215) -0.9% $4,903 3.9% Preferred stock dividend and accretion of preferred stock (549) -0.4% (487) -0.4% Net income (loss) allocable to common shareholders $(1,764) -1.4% $4,416 3.5% Earnings (loss) per common share: Basic earnings (loss) per common share Income before discontinued operations $(0.04) $0.19 Net income (loss) allocable to common shareholders $(0.07) $0.17 Diluted earnings (loss) per common share Income before discontinued operations $(0.04) $0.16 Net income (loss) allocable to common shareholders $(0.07) $0.16 Weighted average common shares outstanding: Basic 26,250 26,216 Diluted 26,250 30,125 RENT-WAY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (all dollars in thousands except per share data) For the nine months ended June 30, 2005 2004 (unaudited) (unaudited) Restated Restated Revenues: Rental revenue $328,596 84.1% $316,514 82.6% Prepaid phone service revenue 13,617 3.5% 19,676 5.1% Other revenues 48,579 12.4% 47,198 12.3% Total Revenues 390,792 100.0% 383,388 100.0% Costs and operating expenses: Depreciation and amortization: Rental merchandise 100,471 25.7% 101,349 26.4% Property and equipment 12,145 3.1% 12,240 3.2% Amortization of intangibles 251 0.1% 310 0.1% Cost of prepaid phone service 8,460 2.2% 13,007 3.4% Salaries and wages 105,164 26.9% 100,552 26.2% Advertising, net 15,524 4.0% 15,387 4.0% Occupancy 27,874 7.1% 25,426 6.6% Restructuring costs - 0.0% 48 0.0% Other operating expenses 83,133 21.3% 79,511 20.7% Total costs and operating expenses 353,022 90.3% 347,830 90.7% Operating income 37,770 9.7% 35,558 9.3% Other income (expense): Interest expense (21,662) -5.5% (22,919) -6.0% Interest income 22 0.0% 792 0.2% Amortization and write-off of deferred financing costs (854) -0.2% (748) -0.2% Other income (expense), net (4,601) -1.2% (1,493) -0.4% Income before income taxes and discontinued operations 10,675 2.7% 11,190 2.9% Income tax expense 4,185 1.1% 4,185 1.1% Income (loss) before discontinued operations 6,490 1.7% 7,005 1.8% Loss from discontinued operations (361) -0.1% (1,722) -0.4% Net income (loss) $6,129 1.6% $5,283 1.4% Preferred stock dividend and accretion of preferred stock (1,619) -0.4% (1,286) -0.3% Net income (loss) allocable to common shareholders $4,510 1.2% $3,997 1.0% 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 $0.17 $0.15 Diluted earnings (loss) per common share Income before discontinued operations $0.24 $0.26 Net income (loss) allocable to common shareholders $0.17 $0.15 Weighted average common shares outstanding: Basic 26,246 26,155 Diluted 26,778 26,700 Calculation of EBITDA and Reconciliation of Net Cash (Used in) Provided by Operations to EBITDA For the Three Months Ended June 30, 2005 and 2004 (all dollars in thousands) Three Months Ended 06/30/05 06/30/04 (unaudited) (unaudited) Restated Calculation of EBITDA Operating income $12,307 $12,326 Depreciation - property and equipment 3,732 3,836 Amortization of intangibles 195 86 EBITDA $16,234 $16,248 Reconciliation of Net Cash (Used in) Provided by Operations to EBITDA Three Months Ended 06/30/05 06/30/04 (unaudited) (unaudited) Restated Net cash (used in) provided by operating activities $(8,370) $3,611 Net cash used in discontinued operations 181 12 Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities (42,609) (35,878) Changes in assets and liabilities 49,583 37,158 Depreciation - property and equipment 3,732 3,836 Amortization of intangibles 195 86 Interest expense 7,304 7,398 Interest income (9) (9) Amortization of deferred financing costs 289 227 Other (income) expense 4,362 (1,600) Income taxes 1,395 1,395 Loss from discontinued operations 181 12 EBITDA $16,234 $16,248 RENT-WAY, INC. RECONCILIATION OF CORE STORES REVENUES AND OPERATING INCOME For the Three Months Ended June 30, 2005 (all dollars in thousands) Operating Revenues Income Rent-Way, Inc., as reported $128,297 $12,307 New store revenues and operating loss (2,793) 2,587 Rent-Way, Inc. revenues and operating income excluding New Stores $125,504 $14,894 DPI revenues and operating loss (4,313) 160 DPI commissions 166 (30) Core stores revenues and operating income $121,357 $15,024 Retrospective insurance adjustments - 1,852 Core stores revenues and operating income excluding annual insurance adjustments $121,357 $13,172 RECONCILIATION OF CORE STORES WITH NEW STORES REVENUES AND OPERATING INCOME For the Three Months Ended June 30, 2005 (all dollars in thousands) Operating Revenues Income Rent-Way, Inc., as reported $128,297 $12,307 DPI revenues and operating loss (4,313) 160 DPI commissions 166 (30) Core stores with new stores revenues and operating income $124,150 $12,437 Retrospective insurance adjustments - 1,852 Core stores with new stores revenues and operating income excluding annual insurance adjustments $124,150 $10,585 RENT-WAY, INC. RECONCILIATION OF NET INCOME AND NET INCOME ALLOCABLE TO COMMON SHAREHOLDERS EXCLUDING FAS 133 CHARGE For the Three Months Ended June 30, 2005 (all dollars in thousands) Net Income (Loss) Allocable to Net Common Income (Loss) Shareholders Rent-Way, Inc., as reported $(1,215) $(1,764) FAS 133 charge related to the conversion feature of preferred stock (4,969) (4,969) Net income and net income allocable to common shareholders excluding FAS 133 charge $3,754 $3,205 DATASOURCE: Rent-Way, Inc. CONTACT: Bill McDonnell, CFO of Rent-Way, +1-814-455-5378 Web site: http://www.rentway.com/

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