RWY Rent Way

Rent-Way Reports Fiscal 2003 Fourth Quarter And Full Year Financial Results ERIE, Pa., Nov. 13 /PRNewswire-FirstCall/ -- Rent-Way, Inc. today reported financial results for its fourth quarter and fiscal year ended September 30, 2003. As a result of the company's sale of 295 stores earlier this year, all historical results reported in this news release have been reclassified to account for those stores as discontinued operations. The Company reported consolidated revenues of $118.9 million for its fourth fiscal quarter, versus $117.8 million in the same quarter of last fiscal year. Revenues from the Company's core rental business (which excludes the company's dPi Teleconnect unit) were $111.7 million versus $109.3 million in the same quarter last year. Same store revenues increased 2.5% vs. last year's quarter. Consolidated operating income in the fiscal fourth quarter of 2003 was $9.3 million up from consolidated operating income of $5.8 million in the same period last year. Consolidated net loss for the quarter was $0.6 million versus a consolidated net loss of $7.9 million last year. The net loss available to common stockholders was $1.0 million, or $(0.04) per share compared with a net loss of $7.9 million, or $(0.31) per share, in the 2002 fourth quarter. The Company reported consolidated revenues of $491.3 million for fiscal 2003, versus $493.4 million in the prior year. Revenues from the Company's core rental business were $456.0 million versus $455.6 million last year. For the full fiscal year, same store revenues increased 0.8%. Consolidated operating income for fiscal year 2003 was $36.5 million versus $23.4 million in the prior year. Consolidated net loss for the year was $29.4 million, versus a consolidated net loss of $76.5 million last year. The net loss for fiscal 2003 was unfavorably impacted by a $14.0 million expense for the settlement of the class action lawsuit and a $15.8 million loss from discontinued operations. The net loss for fiscal 2002 was unfavorably impacted by a $41.5 million goodwill write-off. The net loss available to common stockholders for fiscal 2003 was $29.9 million, or $(1.16) per share compared with a net loss of $76.5 million, or $(3.06) per share, in the prior year. "The investments we have made and the tireless efforts expended by our team to grow our business are beginning to pay off. Our same store sales increase exceeded our expectations in the last quarter. For the year we increased our active rental agreement count by over 19,000 compared to losing over 26,000 in fiscal 2002. This performance demonstrates the capabilities of a focused, well financed Rentway operations team, " stated William E. Morgenstern, Rent-Way's Chairman and CEO. "Let me assure you that while we acknowledge the results our team achieved in 2003, we understand the final measurement of our team's strength and long term potential is operating the company profitably. By continuing to invest in our people and marketing, it is our intention to deliver on that measurement in 2004." The company reported EBITDA for the 2003 fourth quarter and fiscal year of $13.8 million and $57.6 million, respectively. Fiscal 2002 fourth quarter and full year EBITDA was $12.2 million and $50.3 million, respectively. EBITDA for 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 (used in) operations for the fourth quarter and fiscal year of $22.8 million and ($23.3 million), respectively. Fiscal 2002 fourth quarter and full year net cash provided by operations was $35.8 million and $48.7 million, respectively. A reconciliation of EBITDA to net cash provided by (used in) operating activities is presented in the chart of supplemental information attached to this release. The Company expects core rental business revenues (which excludes the company's dPi Teleconnect unit) for fiscal 2004 to be $461 million to $470 million and operating income to be $38.9 million to $43.6 million. The quarterly breakdown is as follows: Quarter Revenue Operating Income December 31, 2003 $113-$114 million $6.5-$7.5 million March 31, 2004 $119-$122 million $11.3-$12.8 million June 30, 2004 $115-$118 million $10.9-$12.3 million September 30, 2004 $114-$116 million $10.2-$11.0 million 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 753 stores in 33 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) September 30, 2003 September 30, 2002 (Unaudited) (Unaudited) Cash and cash equivalents $3,303 $7,295 Prepaid expenses 8,144 10,361 Rental merchandise, net 171,982 147,608 Total Assets 458,327 510,794 Accounts payable 30,244 17,643 Debt 214,592 277,207 Total Liabilities 335,547 374,197 Shareholders' Equity 106,789 136,597 RENT-WAY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (all dollars in thousands, except per share data) For the three months ended September 30, 2003 2002 (unaudited) (unaudited) Revenues: Rental revenue $97,000 81.6% $93,877 79.7% Prepaid phone service revenue 7,123 6.0% 8,504 7.2% Other revenue 14,735 12.4% 15,455 13.1% Total Revenue 118,858 100.0% 117,836 100.0% Costs and operating expenses: Depreciation and amortization: Rental merchandise 30,203 25.4% 29,765 25.3% Property and equipment 4,325 3.6% 5,963 5.1% Amortization of goodwill and other intangibles 147 0.1% 438 0.4% Cost of prepaid phone service 4,583 3.9% 5,511 4.7% Salaries and wages 32,098 27.0% 30,363 25.8% Advertising, net 5,194 4.4% 6,128 5.2% Occupancy 8,328 7.0% 7,406 6.3% Restructuring costs 43 0.0% - 0.0% Other operating expenses 24,656 20.7% 26,447 22.4% Total costs and operating expenses 109,577 92.2% 112,021 95.1% Operating income 9,281 7.8% 5,815 4.9% Other income (expense): Settlement of class action lawsuit - 0.0% - 0.0% Interest expense (8,160) -6.9% (9,719) -8.2% Interest income 16 0.0% 25 0.0% Other income (expense), net (675) -0.6% (491) -0.4% Income (loss) before income taxes 462 0.4% (4,370) -3.7% Income tax expense 850 0.7% 1,897 1.6% Loss before change in accounting principle and discontinued operations (388) -0.3% (6,267) -5.3% Cumulative effect of change in accounting principle - 0.0% - 0.0% Loss from discontinued operations (194) -0.2% (1,591) -1.4% Net loss $(582) -0.5% $(7,858) -6.7% Amortization of deemed dividend and accretion of preferred stock (389) -0.3% - 0.0% Loss available to common shareholders $(971) -0.8% $(7,858) -6.7% Loss per common share: Basic loss per common share Loss before change in accounting principle and discontinued operations $(0.03) $(0.24) Net loss $(0.04) $(0.31) Diluted loss per common share Loss before change in accounting principle and discontinued operations $(0.03) $(0.24) Net loss $(0.04) $(0.31) Weighted average common shares outstanding: Basic 25,780 25,671 Diluted 25,780 25,671 RENT-WAY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (all dollars in thousands, except per share data) For the years ended September 30, 2003 2002 (unaudited) (unaudited) Revenues: Rental revenue $397,420 80.9% $394,036 79.9% Prepaid phone service revenue 35,319 7.2% 37,740 7.6% Other revenue 58,571 11.9% 61,594 12.5% Total Revenue 491,310 100.0% 493,370 100.0% Costs and operating expenses: Depreciation and amortization: Rental merchandise 122,287 24.9% 133,416 27.0% Property and equipment 19,717 4.0% 24,636 5.0% Amortization of goodwill and other intangibles 1,360 0.3% 2,277 0.5% Cost of prepaid phone service 21,871 4.5% 23,697 4.8% Salaries and wages 130,700 26.6% 121,199 24.6% Advertising, net 22,251 4.5% 27,084 5.5% Occupancy 32,847 6.7% 31,715 6.4% Restructuring costs 3,046 0.6% - 0.0% Other operating expenses 100,738 20.5% 105,977 21.5% Total costs and operating expenses 454,817 92.6% 470,001 95.3% Operating income 36,493 7.4% 23,369 4.7% Other income (expense): Settlement of class action lawsuit (14,000) -2.8% - 0.0% Interest expense (36,171) -7.4% (44,440) -9.0% Interest income 93 0.0% 357 0.1% Other income (expense), net 4,028 0.8% 2,364 0.5% Income (loss) before income taxes (9,557) -1.9% (18,350) -3.7% Income tax expense 4,040 0.8% 16,483 3.3% Loss before change in accounting principle and discontinued operations (13,597) -2.8% (34,833) -7.1% Cumulative effect of change in accounting principle - 0.0% (41,527) -8.4% Loss from discontinued operations (15,780) -3.2% (112) 0.0% Net loss $(29,377) -6.0% $(76,472) -15.5% Amortization of deemed dividend and accretion of preferred stock (513) -0.1% - 0.0% Loss available to common shareholders $(29,890) -6.1% $(76,472) -15.5% Loss per common share: Basic loss per common share Loss before change in accounting principle and discontinued operations $(0.55) $(1.39) Net loss $(1.16) $(3.06) Diluted loss per common share Loss before change in accounting principle and discontinued operations $(0.55) $(1.39) Net loss $(1.16) $(3.06) Weighted average common shares outstanding: Basic 25,780 25,021 Diluted 25,780 25,021 Calculation of EBITDA and Reconciliation of Net Cash Provided by (Used in) Operations to EBITDA For the Three Months and Year Ended September 30, 2003 and 2002 Three Months Ended Years Ended 09/30/03 09/30/02 09/30/03 09/30/02 (unaudited) (unaudited) Calculation of EBITDA Operating income $9,281 $5,815 $36,493 $23,369 Depreciation - property and equipment 4,325 5,963 19,717 24,636 Amortization of goodwill and other intangibles 147 438 1,360 2,277 EBITDA $13,753 $12,216 $57,570 $50,282 Reconciliation of Net Cash Provided by (Used in) Operations to EBITDA Three Months Ended Years Ended 09/30/03 09/30/02 09/30/03 09/30/02 (unaudited) (unaudited) Net cash provided by (used in) operating activities $22,753 $35,807 $(23,308) $48,702 Depreciation - Rental merchandise (30,203) (29,765) (122,287) (133,416) Depreciation - discontinued operations - PP&E - 313 669 - Amortization of deferred financing fees 393 - (1,183) - Amortization of swap transitional asset 171 - 860 - Bond and preferred stock accretion (107) - (107) - Interest expense 8,160 9,719 36,171 44,440 Interest income (16) (25) (93) (357) Settlement of class action lawsuit - - 14,000 - Other income (expense) 675 491 (4,028) (2,364) Income taxes 850 1,897 4,040 16,483 Cumulative effect of change in accounting principle - - - 41,527 Write-off of deferred financing costs - - (1,143) (3,810) Deferred income taxes (850) (1,896) (4,915) - Goodwill impairment - - - (58,935) Market adjustment for interest rate swap derivative (953) 1,418 (4,576) (479) Market adjustment for preferred stock conversion option derivative (1,666) - (1,899) - Write-off of property and equipment (1,624) (87) (3,649) (1,571) Gain on sale of assets 1,263 28 1,894 552 Changes in assets and liabilities: Restricted cash for shareholder litigation: 10,000 - 10,000 - Prepaid expenses (2,954) (2,884) (2,217) (3,173) Rental merchandise 34,489 13,487 146,758 123,367 Rental merchandise deposits and credits due from vendors (76) (142) 3,161 (1,491) Income tax receivable (102) (733) 54 (4,048) Other assets (4,547) 933 7,000 (1,669) Accounts payable (16,884) (8,628) (10,206) 1,900 Other liabilities (5,213) (2,852) 3,725 (1,128) Cash provided by (used in) discontinued operations 194 (4,865) 8,849 (14,248) EBITDA $13,753 $12,216 $57,570 $50,282 DATASOURCE: Rent-Way, Inc. CONTACT: Deborah Peterson of Rent-Way, Inc., +1-814-461-5225 Web site: http://www.rentway.com/

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