UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
January 19, 2000 (January 18, 2000)
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Date of Report (Date of earliest event reported)
Rent-Way, Inc.
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(Exact name of registrant as specified in its charter)
Pennsylvania 000-22026 25-1407782
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(State or other jurisdiction (Commission File Number) (IRS Employer
of corporation) Identification No.)
One RentWay Place, Erie, Pennsylvania 16505
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(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: (814) 455-5378
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Item 5. Other Events
The registrant issued the following press release on January 18, 2000:
Erie, PA.-- Rent-Way, Inc. (NYSE: RWY) today announced that it has acquired a
49% interest in DPI Teleconnect, LLC, a privately-held provider of prepaid local
phone service. Rent-Way has agreed to acquire an additional 21% interest upon
receipt of regulatory approvals. DPI is currently licensed to offer pre-paid
local phone service in 21 states and is working to expand to over 40 states by
the end of 2000.
"We are very excited about this investment", said William E. Morgenstern,
Chairman and CEO of Rent-Way. "We have looked at this business for nearly a year
and have had very successful tests in about 70 of our stores." According to Dave
Dorwart, President and CEO of DPI, "Historically, individuals who, for whatever
reason, could not meet the credit or deposit requirements of the local phone
companies have done without a phone. The service DPI offers provides them with
access to local phone service, 911 and the Internet. Partnering with Rent-Way
will allow DPI to grow more quickly and become a leader in the pre-paid local
phone service industry."
In addition to offering its service through RentWay stores, DPI offers pre-paid
phone service through 25 other agents in over 550 locations. "Agents, including
RentWay, receive the benefit of additional traffic in their locations as well as
a ten percent commission from the sale of the service. DPI's agent base is
strong and growing, and consists of high quality public and private companies.
DPI intends to sign up 60-80 new locations per month. Partnering with Rent-Way
benefits all the agents because more stores in the network allow DPI to spread
increased dollars over a larger base to generate more traffic", according to
Dorwort.
"One of our key considerations in making this move was the strength of
management and systems" Morgenstern said. "The DPI team is a high quality group
that has invested in systems and technology that are scaleable and will allow
them to grow quickly." In addition to pre-paid local phone service, DPI plans to
offer pre-paid long distance sometime next month. Research into the possibility
of offering pre-paid Internet access to customers without credit cards is
underway as well.
Rent-Way's investment in DPI is expected to total approximately $7.5 million.
"This is a start up company with only a one year history. As a start up, DPI has
grown explosively. Sales for 1999 were just over $2.5 million. However, the
first customer wasn't signed up until May of 1999. Currently there are over
14,000 customers paying about $50.00 per month." said Morgenstern. "If the
execution of DPI's roll out plan is successful, sales in 2000 could reach nearly
$20 million." DPI's impact on Rent-Way's Calendar 2000 earnings is expected to
be neutral because commission income generated by sales in its stores will
probably be offset by Rent-Way's share of DPI's losses resulting from adding new
locations and agents. "We have no way of knowing the upside of this investment."
said Morgenstern. "We do know, according to the 1990 census, that there are
about 6 million households wired for service with dead dial tones. We believe a
significant percent of those homes are located close to RentWay stores or DPI's
agent locations."
Rent-Way is the second-largest operator of rental-purchase stores in the USA.
Rent-Way rents quality, brand name merchandise such as home entertainment
equipment, furniture and major appliances through 1088 stores operating in 41
states.
For more information visit www.rentway.com
This release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. The accuracy of these
statements, which involve expectations regarding future events, are necessarily
subject to uncertainties and risks that may cause actual results to differ
materially from such statements. Among the factors that may cause such a
difference are the possibility that Rent-Way does not receive the approvals
necessary to acquire an additional 21% interest in DPI, that DPI as a start-up
company is unable to execute its growth plan profitably or at all and the risk
that the market for DPI's services disappears or changes (whether through
technological advances or otherwise) or is not as large as anticipated.
SIGNATURES
Pursuant to the requirements of the Securities and 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.
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(Registrant)
Date January 19, 2000 /s/ Matthew J. Marini
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(Signature)
Matthew J. Marini
Controller and Chief Accounting Officer
