RWY Rent Way

Rent-Way Reports Fiscal 2004 Second Quarter Financial Results Comp Revenues Increase 6.9%; Operating Income Doubles ERIE, Pa., April 29 /PRNewswire-FirstCall/ -- Rent-Way, Inc. today reported financial results for its fiscal 2004 second quarter ended March 31, 2004. The Company reported consolidated revenues of $135.0 million versus $130.2 million in the same quarter last year. Revenues from the company's core rental business (which excludes the company's dPi Teleconnect unit) were $128.2 million versus $120.3 million in the same quarter last year. Same store revenues increased 6.9% versus last year's quarter. Consolidated operating income in the quarter was $15.2 million, up from $7.5 million in the same period last year. Consolidated net income allocable to common shareholders was $6.3 million, or $0.22 per diluted share versus a net loss of $27.9 million last year, or $(1.09) per diluted share. The comparability of consolidated net income allocable to common shareholders in the 2004 fiscal second quarter with the same quarter in fiscal 2003 is affected by several significant charges in the 2003 quarter totaling approximately $29.6 million, including a $14.0 million charge on settlement of our prior securities class action litigation and a $13.4 million loss from discontinued operations. "I am very pleased with our performance in the quarter," stated William Morgenstern, Rent-Way's Chairman and CEO. "Since our June 2003 refinancing, we have had three consecutive full quarters of period over period increases in revenues and operating income and positive store comps. We will continue to make investments in marketing, in our employees and in our stores in order to ensure strong top-line performance during the remainder of fiscal 2004 and beyond." William McDonnell, Vice President and Chief Financial Officer stated, "For the quarter, we again exceeded our guidance on revenue and operating income. Shareholders should note, however, that due to the seasonality of our rent-to-own business our fiscal second quarter is traditionally the quarter in which we report our strongest numbers. We expect performance in accordance with our prior guidance in our fiscal 2004 third and fourth quarters." The company reported EBITDA for the quarter of $19.1 million versus $13.1 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 provided by operations for the quarter of $22.0 million versus net cash used in operations of $(4.3) million in the same quarter last year. A reconciliation of EBITDA to net cash provided by (used in) operations is 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 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, business and demographic 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 service 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. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (all dollars in thousands except per share data) For the three months ended March 31, 2004 2003 (unaudited) (unaudited) Revenues: Rental revenue $111,126 82.3% $104,489 80.2% Prepaid phone service revenue 6,884 5.1% 9,931 7.6% Other revenue 17,035 12.6% 15,819 12.1% Total Revenue 135,045 100.0% 130,239 100.0% Costs and operating expenses: Depreciation and amortization: Rental merchandise 37,131 27.5% 33,320 25.6% Property and equipment 3,741 2.8% 5,153 4.0% Amortization of intangibles 110 0.1% 474 0.4% Cost of prepaid phone service 4,952 3.7% 6,012 4.6% Salaries and wages 33,598 24.9% 32,562 25.0% Advertising, net 4,272 3.2% 4,721 3.6% Occupancy 8,495 6.3% 8,445 6.5% Restructuring costs - 0.0% 2,215 1.7% Other operating expenses 27,505 20.4% 29,815 22.9% Total costs and operating expenses 119,804 88.7% 122,717 94.2% Operating income 15,241 11.3% 7,522 5.8% Other income (expense): Settlement of class action lawsuit - 0.0% (14,000) -10.7% Interest expense (7,662) -5.7% (8,511) -6.5% Interest income 14 0.0% 43 0.0% Amortization and write-off of deferred financing costs (264) -0.2% (738) -0.6% Other income (expense), net 1,229 0.9% 1,795 1.4% Income (loss) before income taxes 8,558 6.3% (13,889) -10.7% Income tax expense 1,395 1.0% 672 0.5% Income (loss) before discontinued operations 7,163 5.3% (14,561) -11.2% Loss from discontinued operations (437) -0.3% (13,357) -10.3% Net income (loss) $6,726 5.0% $(27,918) -21.4% Dividend and accretion of preferred stock (403) -0.3% - 0.0% Net income (loss) allocable to common shareholders $6,323 4.7% $(27,918) -21.4% Earnings (loss) per common share: Basic earnings (loss) per common share Income (loss) before discontinued operations $0.27 $(0.57) Net income (loss) allocable to common shareholders $0.24 $(1.09) Diluted earnings (loss) per common share Income (loss) before discontinued operations $0.24 $(0.57) Net income (loss) allocable to common shareholders $0.22 $(1.09) Weighted average common shares outstanding: Basic 26,172 25,686 Diluted 30,026 25,686 RENT-WAY, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (all dollars in thousands except per share data) For the six months ended March 31, 2004 2003 (unaudited) (unaudited) Revenues: Rental revenue $213,554 82.6% $201,277 80.5% Prepaid phone service revenue 13,074 5.1% 19,192 7.7% Other revenue 32,026 12.4% 29,608 11.8% Total Revenue 258,654 100.0% 250,077 100.0% Costs and operating expenses: Depreciation and amortization: Rental merchandise 70,003 27.1% 62,013 24.8% Property and equipment 7,723 3.0% 10,809 4.3% Amortization of intangibles 224 0.1% 952 0.4% Cost of prepaid phone service 8,931 3.5% 11,739 4.7% Salaries and wages 67,240 26.0% 66,306 26.5% Advertising, net 10,401 4.0% 13,481 5.4% Occupancy 17,196 6.6% 16,105 6.4% Restructuring costs 48 0.0% 2,215 0.9% Other operating expenses 53,128 20.5% 54,440 21.8% Total costs and operating expenses 234,894 90.8% 238,060 95.2% Operating income 23,760 9.2% 12,017 4.8% Other income (expense): Settlement of class action lawsuit - 0.0% (14,000) -5.6% Interest expense (15,521) -6.0% (17,209) -6.9% Interest income 784 0.3% 54 0.0% Amortization and write-off of deferred financing costs (522) -0.2% (1,136) -0.5% Other income (expense), net (3,093) -1.2% 3,282 1.3% Income (loss) before income taxes 5,408 2.1% (16,992) -6.8% Income tax expense 2,790 1.1% 2,102 0.8% Income (loss) before discontinued operations 2,618 1.0% (19,094) -7.6% Loss from discontinued operations (1,710) -0.7% (14,184) -5.7% Net income (loss) $908 0.4% $(33,278) -13.3% Dividend and accretion of preferred stock (798) -0.3% - 0.0% Net income (loss) allocable to common shareholders $110 0.0% $(33,278) -13.3% Earnings (loss) per common share: Basic earnings (loss) per common share Income (loss) before discontinued operations $0.10 $(0.74) Net income (loss) allocable to common shareholders $0.00 $(1.30) Diluted earnings (loss) per common share Income (loss) before discontinued operations $0.10 $(0.74) Net income (loss) allocable to common shareholders $0.00 $(1.30) Weighted average common shares outstanding: Basic 26,125 25,686 Diluted 26,602 25,686 RENT-WAY, INC. SELECTED BALANCE SHEET DATA (all dollars in thousands) March 31, 2004 September 30, 2003 Cash and cash equivalents $4,815 $3,303 Prepaid expenses 11,273 8,144 Rental merchandise, net 178,508 171,982 Total Assets 443,693 457,859 Accounts payable 19,440 30,244 Debt 226,753 214,592 Total Liabilities 312,869 335,079 Shareholders' Equity 107,571 106,789 Calculation of EBITDA and Reconciliation of Net Cash Provided by (Used in) Operations to EBITDA For the Three Months Ended March 31, 2004 and 2003 (all dollars in thousands) Three Months Ended 03/31/04 03/31/03 Calculation of EBITDA Operating income $15,241 $7,522 Depreciation - property and equipment 3,741 5,153 Amortization of intangibles 110 474 EBITDA $19,092 $13,149 Reconciliation of Net Cash Provided by (Used in) Operations to EBITDA Three Months Ended 03/31/04 03/31/03 Net cash provided by (used in) operating activities $21,986 $(4,254) Depreciation and amortization (41,368) (39,448) Depreciation - property and equipment 3,741 5,153 Amortization of intangibles 110 474 Settlement of class action lawsuit - 14,000 Interest expense 7,662 8,511 Interest income (14) (43) Amortization and write off of deferred financing costs 264 738 Other income (expense) (1,229) (1,795) Income taxes 1,395 672 Deferred income taxes (1,395) (1,547) Market adjustment for interest rate swap derivative 605 1,375 Market adjustment for preferred stock conversion option derivative 1 - Write-off of property and equipment (48) (1,391) Gain on sale of assets - 389 Changes in assets and liabilities: Prepaid expenses 6,369 2,234 Rental merchandise 16,755 38,076 Rental merchandise deposits and credits due from vendors (328) (105) Income tax receivable (4,223) 193 Other assets (219) 13,821 Accounts payable 18,022 (2,998) Other liabilities (9,432) (25,954) Cash used in discontinued operations 438 5,048 EBITDA $19,092 $13,149 DATASOURCE: Rent-Way, Inc. CONTACT: Bill Morgenstern, Chairman & CEO of Rent-Way, Inc., +1-814-455-5378 Web site: http://www.rentway.com/

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