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., +1-330-533-5363, ext. 121, or
email, ; or Dan Pecchia of Innis Maggiore Group, +1-330-702-0490,
or email, Web site: http://www.rainbowrentals.com/
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