UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-KA
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
December 3, 1999 ( September 24, 1999 )
--------------------------------------
Date of Report (Date of earliest event reported)
Rent-Way, Inc.
-------------
(Exact name of registrant as specified in its charter)
Pennsylvania 000-22026 25-1407782
------------ --------- ----------
(State or other jurisdiction) (Commission File Number) (IRS Employer
of corporation) Identification No.)
One Rentway Place, Erie, Pennsylvania 16505
- -------------------------------------------------------------------------
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: (814) 455-5378
-----------------------
This Current Report on Form 8-K/A amends the Current Report on Form 8-K filed
October 12, 1999 to file the financial statements and pro forma financial
information required under Item 7.
Item 7. Financial Statements and Exhibits
a. Financial statements of business acquired:
Audited Financial Statements of Rentavision, Inc.
Report of Independent Accountants 3
Balance Sheets - as of December 31, 1998 and December 31, 1997 4
Statements of Income and Retained Earnings for the years ended
December 31, 1998 and December 31, 1997 5
Statements of Cash Flows for the years ended December 31, 1998
and December 31, 1997 6
Notes to Financial Statements 7
b. Pro-forma condensed financial information:
Rent-Way, Inc. and Rentavision, Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
as of June 30, 1999 11
Notes to Unaudited Pro Forma Condensed Consolidated
Balance Sheet 12
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended June 30, 1999 14
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended September 30, 1998 15
Notes to Unaudited Pro Forma Condensed Consolidated Statements
of Operations 16
Report of Independent Accountants
To the Stockholder of
Rentavision, Inc.
In our opinion, the accompanying balance sheets and the related statements of
income and retained earnings and of cash flows present fairly, in all material
respects, the financial position of Rentavision, Inc. at December 31, 1998 and
1997, and the results of its operations and its cash flows for the years then
ended, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Syracuse, New York
March 5, 1999, except as to certain information
presented in the second paragraph of Note 3,
as to which the date is April 28, 1999
<TABLE>
<CAPTION>
Rentavision, Inc.
Balance Sheets
December 31, December 31,
1998 1997
---- ----
<S> <C> <C>
Cash $ 774,823 $ 184,945
Prepaid expenses and other assets 272,454 195,974
Rental merchandise on hand and rented 46,080,580 32,280,236
Less: Accumulated depreciation (14,526,432) (10,451,597)
-------------- ------------
31,554,148 21,828,639
Property and equipment, net 7,516,443 5,262,706
Deposits 84,543 66,592
-------------- ------------
Total assets $ 40,202,411 $ 27,538,856
============== ============
Liabilities and stockholder's equity
Liabilities:
Line of credit $ 22,163,235 $ 11,346,820
Accounts payable 1,400,248 2,423,134
Accrued expenses 902,425 1,034,107
Sales tax payable 257,234 212,263
Term notes payable (including current portion of
$1,409,398 and $1,006,921) 3,989,955 3,151,490
-------------- ------------
Total liabilities 28,713,097 18,167,814
Stockholder's equity:
Common stock, no par value, 5,000,000 shares authorized,
590,000 shares issued and outstanding 52,226 52,226
Retained earnings 11,511,699 9,393,427
Less: Treasury stock, at cost (74,611) (74,611)
-------------- ------------
Total stockholder's equity 11,489,314 9,371,042
-------------- ------------
Total liabilities and stockholder's equity $ 40,202,411 $ 27,538,856
============== ============
The accompanying notes are an integral part of the
financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Rentavision, Inc.
Statements of Income and Retained Earnings
Year Ended Year Ended
December 31, December 31,
1998 1997
---- ----
<S> <C> <C>
Rental income $ 54,415,872 $ 37,163,083
Other revenue 10,878,412 7,340,406
--------------- --------------
65,294,284 44,503,489
Depreciation of rental equipment and
cost of sales 18,384,272 12,712,722
--------------- -------------
Operating expenses:
Salaries and wages 18,700,110 12,630,566
Payroll taxes and benefits 3,291,289 2,264,561
Rents and property taxes 5,416,957 3,148,425
Utilities 1,200,413 906,128
Telephone 963,996 667,518
Insurance 1,039,364 741,583
Maintenance and security 1,167,219 1,084,314
Vehicle and travel 2,579,754 1,550,144
Merchandise repairs 553,100 526,617
Advertising 3,285,288 2,543,172
Depreciation 1,558,124 806,382
Fees and subscriptions 728,965 421,599
Professional fees 385,608 243,606
Office supplies 1,473,318 1,042,988
Other 26,483 81,462
--------------- -------------
Total operating expenses 42,369,988 28,659,065
--------------- -------------
Income from operations 4,540,024 3,131,702
Other income (expense):
Interest expense (1,673,294) (1,208,627)
Other 19,220 12,102
--------------- -------------
Income before taxes 2,885,950 1,935,177
State franchise tax (62,537) (40,236)
--------------- -------------
Net income 2,823,413 1,894,941
Retained earnings, beginning of year 9,393,427 7,949,704
Distributions to stockholder (705,141) (451,218)
--------------- -------------
Retained earnings, end of year $ 11,511,699 $ 9,393,427
=============== =============
The accompanying notes are an integral part of the
financial statements.
</TABLE>
<TABLE>
<CAPTION>
Rentavision, Inc.
Statements of Cash Flows
Year Ended Year Ended
December 31, December 31,
1998 1997
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income $ 2,823,413 $ 1,894,941
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 1,558,124 806,382
Depreciation of rental merchandise 16,314,177 10,875,906
(Gain) loss on sale of rental equipment (221,266) 86,230
Prepaid expenses and other assets (76,480) (104,386)
Deposits (17,951) (6,578)
Accounts payable (1,022,886) 1,108,363
Accrued expenses (131,682) 506,125
Sales tax payable 44,971 57,844
--------------- ---------------
Net cash provided by operating activities 19,270,420 15,224,827
--------------- ---------------
Cash flows from investing activities:
Purchase of rental merchandise (28,037,871) (20,290,083)
Proceeds from sale of rental merchandise 2,219,451 1,708,627
Capital expenditures, net (1,797,391) (1,482,493)
---------------- ---------------
Net cash used in investing activities (27,615,811) (20,063,949)
---------------- ---------------
Cash flows from financing activities:
Payments on debt (1,176,005) (679,621)
Distributions to stockholder (705,141) (451,218)
Payments on notes payable (12,133,585) (9,823,573)
Proceeds on notes payable 22,950,000 15,698,737
---------------- ---------------
Net cash provided by financing activities 8,935,269 4,744,325
---------------- ---------------
Increase (decrease) in cash 589,878 (94,797)
Cash and cash equivalents, beginning of year 184,945 279,742
---------------- ---------------
Cash and cash equivalents, end of year $ 774,823 $ 184,945
================ ===============
Supplemental disclosure of cash activities:
Interest paid $ 1,844,081 $ 1,133,629
State taxes paid 38,272 12,762
Supplemental disclosure of non-cash investing
and financing activities:
Acquisition of fixed assets with directly related debt $ 2,014,470 $ 2,204,548
The accompanying notes are an integral part of the financial statements
</TABLE>
<PAGE>
Rentavision, Inc.
Notes to Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
Rentavision, Inc. (the "Company") operates a chain of 241 retail units at
December 31, 1998 under the following names: Rentavision (219), Champs
Rent-To-Own (20) and Repo Depot (2). The retail stores rent durable household
products such as home entertainment equipment, furniture and major appliances to
customers on a weekly or monthly basis of up to eighteen months. The stores are
located throughout the northeast with a large concentration of stores in New
York State.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid investments purchased with a maturity of three months or less to be cash
equivalents. The Company periodically maintains cash balances at banking
institutions in excess of federal deposit insurance limits.
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided over the
estimated useful lives of the respective assets principally on a straight-line
basis. Leasehold improvements are amortized over the shorter of their estimated
useful life or the term of the lease.
Repairs and maintenance are expensed as incurred, while major improvements are
capitalized. Upon sale or other disposition of property and equipment, the cost
and accumulated depreciation will be removed from the accounts and the resulting
gain or loss included in income. Estimated useful lives of property and
equipment are as follows:
Building and improvements 20 - 40
Fixtures and equipment 3 - 7
Vehicles 3 - 5
Rental Merchandise, Rental Revenue and Depreciation
Rental merchandise is rented to customers pursuant to rental agreements, which
provide for weekly, bi-weekly or monthly payments collected in advance. The
Company's rental agreements, which generally run for a period of eighteen
months, contain a cancellation clause allowing the customer to terminate the
agreement at any time without penalty. Title to all rented property remains with
Rentavision, Inc. during the rental period unless a purchase option is
exercised.
Rental revenue is recognized as collected since at the time of collecting, the
rental merchandise has been placed in service and costs of installation and
delivery have been incurred. This method of revenue recognition does not produce
materially different results than if rental revenue was recognized over the
rental term.
The Company's rental merchandise, which is valued at cost when acquired,
includes merchandise on hand and rented merchandise. The valuation of this
merchandise is based on the specific identification method.
The cost of rented merchandise is depreciated under the units of activity
method. Under the units of activity method, the rental merchandise is
depreciated as revenue is collected, generally over an eighteen- month period.
Rental merchandise is not depreciated during periods when it is not on rent and
therefore not generating rental revenue. Items not subsequently purchased by the
customer are placed back into merchandise on hand at their net book value.
Other Revenue
Other revenue includes revenue from various services and charges to rental
customers, including late fees, liability waiver fees, processing fees, and
sales of used merchandise. Other revenue is recognized as collected. This method
of revenue recognition does not produce materially different results than if
other revenue was recognized when earned.
Rentavision, Inc.
Notes to Financial Statements, Continued
1. SIGNIFICANT ACCOUNTING POLICIES (Continued):
Income Taxes
For federal income tax purposes the Company has elected to be taxed as a small
business corporation under "Subchapter-S" of the Internal Revenue Code wherein
the stockholder of the Company reports any earnings or losses on his respective
income tax return. As a result of this election, the earnings of the Company are
taxable to the individual stockholder.
In addition, as required by state tax laws, the Company is responsible for a
minimum state franchise tax or a tax representing the difference between using
the applicable corporate tax rate and the highest personal tax rate.
Pre-Opening Costs
Pre-opening costs incurred in the establishment of a new store location are
treated as period costs and expensed as incurred.
Advertising Costs Advertising costs are expensed as incurred. The Company
paid $258,660 and $401,100 for advertising in 1998 and 1997, respectively.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Reclassifications
Certain 1997 amounts have been reclassified to conform with the 1998 financial
statement presentation.
2. PROPERTY AND EQUIPMENT
Property and equipment, at cost, includes the following at December 31, 1998 and
1997:
<TABLE>
<CAPTION>
1998 1997
------------------------------------
<S> <C> <C>
Land $ 10,000 $ 10,000
Building 36,076 36,076
Furniture and equipment 1,566,607 887,421
Vehicles 602,730 4,684,743
Computer equipment 2,098,441 597,671
Leasehold improvements 6,440,418 1,138,585
----------------------------------
10,754,272 7,354,496
Less: Accumulated depreciation (3,237,829) (2,091,790)
----------------------------------
$ 7,516,443 $ 5,262,706
================= =============
</TABLE>
Rentavision, Inc.
Notes to Financial Statements, Continued
3. LINE OF CREDIT
The Company has a line of credit with a bank, expiring August 1, 1999, for
$35,000,000. Interest is at the bank's prime rate, 7.75% at December 31, 1998.
For advances made for the purpose of inventory acquisition and leasehold
improvements for a new store location, the Company is required to make monthly
principal payments to the bank in the amount of 1/24th of the advance. In
addition, the agreement includes a material adverse change clause, which permits
the bank to call its debt in the event of a material adverse change in the
business. Management does not anticipate any such adverse changes through the
term of the agreement, however, there can be no assurances. The line is
personally guaranteed by the sole stockholder and collateralized by all assets
except for a secondary security interest on vehicles. The balance outstanding at
December 31, 1998 was $22,163,235. The Company was not in compliance with
selected financial covenants for the line of credit agreement. As a result, the
Company has obtained a waiver for such non-compliance through the term of the
agreement.
4. LONG-TERM DEBT
Long-term debt at December 31, 1998 and 1997 consists of the following:
<TABLE>
<CAPTION>
1998 1997
---------------------------------------------
Vehicle loans, varying interest rates from 8% to 12.5%. Due at various
times through 2000. All vehicle loans are collaterized by the related
<S> <C> <C>
vehicles. $ 3,919,955 $ 3,081,490
Note payable to an employee. Interest at 9% is payable monthly.
Principal due upon demand. 70,000 70,000
----------------- --------------
3,989,955 3,151,490
Less: Current portion (1,409,398) (1,006,921)
----------------- --------------
$ 2,580,557 $ 2,144,569
================= ==============
</TABLE>
Future payments required on long-term debt are as follows:
1999 $ 1,479,398
2000 1,306,485
2001 946,867
2002 257,205
-----------
$ 3,989,955
===========
Rentavision, Inc.
Notes to Financial Statements, Continued
5. LEASE COMMITMENTS
The Company leases most of its stores, generally under five year lease terms
with renewal options. Rental expense under these agreements approximated
$4,820,000 and $2,877,000 for the years ended December 31, 1998 and 1997,
respectively.
Future minimum lease payments of operating leases for the next five years and
thereafter are as follows:
1999 $ 4,530,777
2000 4,199,319
2001 3,616,578
2002 2,586,928
2003 634,952
6. RELATED PARTY TRANSACTIONS
The Company leases its corporate offices and selected locations from the sole
shareholder of the Company. Rent expense relating to these properties amounted
to $180,000 and $176,000 in 1998 and 1997, respectively.
In addition, employees trained at the corporate offices are housed in a facility
owned by the sole shareholder of the Company. Payments for use of these
facilities amounted to $50,000 and $40,000 in 1998 and 1997, respectively.
7. PENSION PLAN
The Company has a contributory defined contribution plan covering substantially
all employees. The Company matches 25% of employee contributions to the Plan up
to 5% of eligible compensation. Additional contributions to the Plan are
discretionary at the option of the Company's Board of Directors. Contributions
by the Company to the Plan amounted to $27,892 and $25,502 in 1998 and 1997,
respectively.
<PAGE>
<TABLE>
<CAPTION>
Rent-Way, Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
June 30, 1999
(all dollars in thousands)
23-Sep-99 Pro Forma
Rent-Way Rentavision Adjustments Pro Forma (1)
-------- ----------- ----------- ------------
<S> <C> <C>
Cash $ 6,914 $ 725 (219) $ 7,420
Prepaid expenses 12,188 107 12,295
Rental merchandise, net 189,728 28,758 (16,491) (2) 201,995
Deferred income taxes 2,325 - 2,325
Property and equipment, net 46,490 6,463 (6,314) (2) 46,639
Goodwill, net 222,534 - 84,312 (2)(3) 306,846
Deferred financing costs, net 2,105 - 2,105
Prepaid consulting fee 5,079 - 5,079
Other assets 8,088 101 1,600 (2)(3) 9,789
---------------- --------------- ----------------- -------------
Total assets $ 495,451 $ 36,154 $ 62,888 $ 594,493
================ =============== ================= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 11,495 $ 958 12,453
Other liabilities 18,528 2,792 21,320
Income tax payable 6,971 - 6,971
Debt 198,245 21,419 68,773 (4) 288,437
---------------- --------------- ----------------- ------------
Total liabilities 235,239 28,000 68,773 - 329,181
Shareholders' equity:
Common stock 248,910 - 5,100 (4) 254,010
Retained earnings 11,302 10,985 10,985 (2) 11,302
----------------- --------------- ----------------- ------------
Total stockholders' equity 260,212 10,985 (5,885) 265,312
----------------- --------------- ----------------- ------------
Total liabilities and stockholders' equity $ 495,451 $ 36,154 $ 62,888 $ 594,493
================ =============== ================= ============
See notes to unaudited condensed pro forma balance sheet.
</TABLE>
<PAGE>
Rent-Way, Inc.
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
(all dollars in thousands)
1. BASIS OF PRESENTATION
The unaudited pro forma condensed consolidated balance sheet has been
prepared assuming the acquisition of Rentavision had occurred on June 30, 1999.
The acquisition has been accounted for as a purchase in accordance with the
provisions of Accounting Principles Board Opinion No. 16, and accordingly, the
purchase price has been allocated to the net assets acquired based on historical
information available to management and preliminary estimates of fair market
value. The purchase price is subject to adjustment pending completion of an
audit of the closing date balance sheet and future rental revenue stream as
defined in the purchase agreement. The final purchase price allocation is
subject to refinement upon finalization of the purchase price and completion of
a review of rental merchandise, property and equipment, intangibles and certain
accrued liabilities.
2. The excess purchase prices over the fair value of the net assets of
Rentavision was calculated as follows:
<TABLE>
<CAPTION>
Rentavision
-----------------------
-----------------------
Purchase price:
<S> <C>
Cash $ 68,773
Common stock 5,100
Other acquisition and closing costs 219
------------
Total purchase price 74,092
Less net assets acquired as reported (10,985)
Plus fair value adjustments:
Adjustment to record rental merchandise at fair value 16,491
Adjustment to record property and equipment at fair value 6,314
------------
Excess purchase price over fair value of net assets $ 85,912
acquired and other tangibles ============
</TABLE>
3. The excess purchase prices over the fair value of the net assets was
allocated to assets and liabilities based on historical information and
preliminary estimates of fair value. The purchase price is subject to adjustment
pending completion of an audit of the closing date balance sheet and future
rental revenue stream as defined in the purchase agreement. The final purchase
price allocation is subject to refinement upon finalization of the purchase
price and completion of a review of rental merchandise, property and equipment,
intangibles and certain accrued liabilities. The excess of purchase price over
the fair value of net assets was allocated to non-compete agreements, customer
lists and goodwill as follows:
<TABLE>
<CAPTION>
Rentavision
--------------------
<S> <C>
Adjustment to record fair value of non-compete agreement $ 1,000
Adjustment to record fair value of customer list 600
Adjustment to recognize goodwill 84,312
-----------------
Excess purchase price over fair value of net assets
acquired $ 85,912
=================
</TABLE>
Rent-Way, Inc.
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
(all dollars in thousands)
4. The pro forma condensed consolidated balance sheet has been prepared
assuming that all cash paid was drawn on funds from the Company's senior
revolving credit facility. The Company's existing facility was amended in
September 1999 and was used to pay for the acquisition and related
acquisition costs of Rentavision.
<TABLE>
<CAPTION>
Rentavision
-----------------------
<S> <C>
Cash payment $ 68,773
Payment of acquisition and closing costs 219
-----------------
Total cash paid $ 68,992
=================
Total borrowings on existing credit facility $ 68,773
=================
Net value of common stock issued for acquisition $ 5,100
=================
</TABLE>
Rent-Way, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended June 30, 1999
(all dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
Rent-Way Rentavision Adjustments Pro Forma (1)
---------------------------------------------------------------------
<S> <C> <C> <C>
Total revenue $ 371,661 $ 57,537 $ 429,198
---------------- ---------------- ---------------
Cost and operating expense:
Operating expense 320,594 50,998 $ 375 (3) 371,967
Cost of business combinations 16,800 - 16,800
Name change expense 86 - 86
Amortization of intangibles 7,249 - 2,108 (2) 9,357
---------------- ---------------- ---------- ---------------
Total costs and operating expense 344,729 50,998 2,483 398,210
---------------- ---------------- ---------- ---------------
Operating income/(loss) 26,932 6,539 (2,483) 30,988
Other income (expense):
Interest expense (11,791) (1,579) (4,134) (4) (5) (17,504)
Interest income 29 - - 29
Other expense, net (337) (149) - (486)
---------------- ---------------- --------- ----------------
Income before income tax and
extraordinary item 14,833 4,811 (6,617) 13,027
Income tax expense 9,126 59 (2,647) (6) 6,538
---------------- ---------------- --------- ----------------
Income before extraordinary item 5,707 4,752 (3,970) 6,489
Extraordinary item (519) - - (519)
---------------- ---------------- ---------- ----------------
Net income $ 5,188 $ 4,752 $ (3,970) $ 5,970
================ ================ ========= ================
Earnings per common share:
Diluted number of shares outstanding 21,222 203 (7) 21,425
================ ========= ================
Earnings per share on net income, net
Diluted earnings per share $ 0.24 $ 0.28
================ ================
Earnings per share before extraordinary item, net
Diluted earnings per share $ 0.27 $ 0.30
================ ================
</TABLE>
See notes to unaudited condensed pro forma balance sheet.
Rent-Way, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Year Ended September 30, 1998 for Rent-Way
Year Ended December 31, 1998 for Rentavision
(all dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
Rent-Way Rentavision Adjustments Pro Forma (1)
---------------------------------------------------------------------
<S> <C> <C> <C>
Total revenue $ 436,031 $ 65,294 $ 501,325
---------------- ------------- ------------
Cost and operating expense:
Operating expense 397,274 60,754 $ 500 (3) 458,528
Cost of business combinations 11,210 - 11,210
Name change expense 1,770 - 1,770
Amortization of intangibles 11,248 - 2,810 (2) 14,058
--------------- -------------- --------- ------------
Total costs and operating expense 421,502 60,754 3,310 485,566
--------------- --------------- --------- ------------
Operating income/(loss) 14,529 4,540 (3,310) 15,759
Other income (expense):
Interest expense (11,307) (1,673) (5,512) (4)(5) (18,492)
Interest income 251 - - 251
Other expense, net (540) 19 - (521)
--------------- -------------- --------- ------------
Income before income tax and
extraordinary item 2,933 2,886 (8,822) (3,003)
Income tax expense 4,771 1,126 (3,529) (6) 2,368
--------------- -------------- --------- ------------
Income before extraordinary item (1,838) 1,760 (5,293) (5,371)
Extraordinary item - - - -
--------------- -------------- --------- ------------
Net income $ (1,838) $ 1,760 $ (5,293) $ (5,371)
=============== ============== ========= ============
Earnings per common share:
Diluted number of shares outstanding 20,283 271 (7) 20,554
=============== ========= ============
Earnings per share on net income, net
Diluted earnings per share $ (0.09) $ (0.26)
=============== ============
Earnings per share before extraordinary item, net
Diluted earnings per share $ (0.09) $ (0.26)
=============== ============
See notes to unaudited condensed pro forma balance sheet.
</TABLE>
Rent-Way, Inc.
Notes to Unaudited Pro Forma Condensed Consolidated
Statements of Operations
(all dollars in thousands)
1. BASIS OF PRESENTATION
The unaudited pro forma condensed financial statements have been prepared
assuming the acquisition of Rentavision had occurred on October 1, 1998. The
acquisition has been accounted for as a purchase in accordance with the
provisions of Accounting Principles Board opinion No. 16, and accordingly, the
purchase price has been allocated to the net assets acquired based on historical
information available to management and preliminary estimates of fair market
value. The purchase price is subject to adjustment pending completion of an
audit of the closing date balance sheet and future rental revenue stream as
defined in the purchase agreement. The final purchase price allocation is
subject to refinement upon finalization of the purchase price and completion of
a review of rental merchandise, property and equipment, intangibles and certain
accrued liabilities.
2. Adjustment to recognize amortization of goodwill on a straight-line
basis over thirty years.
Nine months ended June 30, 1999 $ 2,108
Year ended September 30, 1998 $ 2,810
3. Adjustment for amortization of non-compete agreements and customer lists
with a five and two year life respectively.
Nine months ended June 30, 1999 $ 375
Year ended September 30, 1998 $ 500
4. Adjustment to record interest expense on borrowings for acquisitions offset
by elimination of debt and interest expense for Rentavision.
Nine months ended June 30, 1999 $ (3,952)
Year ended September 30, 1998 $ (5,269)
5. Adjustment to record deferred financing expense associated with
Rent-Way's amendment to its credit facility.
Nine months ended June 30, 1999 $ (182)
Year ended September 30, 1998 $ (243)
6. Adjustment to record income tax expense on pro forma adjustments based on
effective tax rate for the combined entity of 40.0%.
Nine months ended June 30, 1999 $ (2,647)
Year ended September 30, 1998 $ (3,529)
7. Adjustment to reflect shares of common stock issued for acquisition of
Rentavision.
Nine months ended June 30, 1999 203
Year ended September 30, 1998 271
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Rent-Way, Inc.
---------------------------------------
(Registrant)
Date December 3, 1999 /s/ Jeffrey A. Conway
-------------------- ---------------------------------------
(Signature)
Jeffrey A. Conway
Senior Vice President and Chief Financial Officer
Date December 3, 1999 /s/ Matthew J. Marini
-------------------- ---------------------------------------
(Signature)
Matthew J. Marini
Controller and Chief Accounting Officer
