<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
Commission File Number 0-25370
RENT-A-CENTER, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 48-1024367
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5700 Tennyson Parkway, Third Floor
Plano, Texas 75024
(972) 801-1100
(Address, including zip code, and telephone
number, including area code, of registrant's
principal executive offices)
NONE
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of May 8, 2000:
Class Outstanding
-------------------------------------- -----------
Common stock, $.01 par value per share 24,320,896
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RENT-A-CENTER, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
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<S> <C> <C>
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of March 31, 2000 and December 31, 1999 3
Consolidated Statements of Earnings for the three months ended 4
March 31, 2000 and 1999
Consolidated Statements of Cash Flows for the three months ended 5
March 31, 2000 and 1999
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition 8
and Results of Operations
Item 3. Quantitative and Qualitative Disclosure About Market Risk 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES
Exhibit 27.1
</TABLE>
2
<PAGE> 3
RENT-A-CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(In Thousands of Dollars) March 31, December 31,
2000 1999
------------ ------------
Unaudited
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 14,093 $ 21,679
Rental merchandise, net
On rent 458,195 425,469
Held for rent 100,901 105,754
Accounts receivable - trade 4,630 3,883
Prepaid expenses and other assets 26,580 27,867
Property assets, net 82,815 82,657
Deferred income taxes 110,367 110,367
Intangible assets, net 701,107 707,324
----------- -----------
$ 1,498,688 $ 1,485,000
=========== ===========
LIABILITIES
Senior debt $ 628,950 $ 672,160
Subordinated notes payable 175,000 175,000
Accounts payable - trade 60,972 53,452
Accrued liabilities 135,201 106,796
----------- -----------
1,000,123 1,007,408
COMMITMENTS AND CONTINGENCIES -- --
PREFERRED STOCK
Redeemable convertible voting preferred stock, net of
placement costs, $.01 par value; 5,000,000 shares
authorized; 273,992 and 271,426 shares issued
and outstanding in 2000 and 1999, respectively 273,468 270,902
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; 50,000,000 shares
authorized; 25,305,520 and 25,297,458 shares
issued in 2000 and 1999, respectively 253 253
Additional paid-in capital 105,719 105,627
Retained earnings 144,125 125,810
----------- -----------
250,097 231,690
Treasury stock, 990,099 shares at cost in 2000 and 1999 (25,000) (25,000)
---------- -----------
225,097 206,690
----------- -----------
$ 1,498,688 $ 1,485,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
3
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RENT-A-CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
(In Thousands of Dollars, except per share data) Three months ended March 31,
----------------------------
2000 1999
--------- ---------
Unaudited
<S> <C> <C>
Revenues
Store
Rentals and fees $ 350,320 $ 301,707
Merchandise sales 27,339 31,886
Other 492 858
Franchise
Merchandise sales 12,891 8,821
Royalty income and fees 1,484 1,425
--------- ---------
392,526 344,697
Operating expenses
Direct store expenses
Depreciation of rental merchandise 71,728 64,466
Cost of merchandise sold 22,830 25,916
Salaries and other expenses 208,525 186,430
Franchise cost of merchandise sold 12,441 8,542
--------- ---------
315,524 285,354
General and administrative expenses 11,475 11,251
Amortization of intangibles 6,975 6,390
--------- ---------
Total operating expenses 333,974 302,995
Operating profit 58,552 41,702
Interest expense 19,008 18,642
Interest income (257) (286)
--------- ---------
Earnings before income taxes 39,801 23,346
Income tax expense 18,912 11,319
--------- ---------
NET EARNINGS 20,889 12,027
Preferred dividends 2,554 2,441
--------- ---------
Net earnings allocable to common stockholders $ 18,335 $ 9,586
========= =========
Basic earnings per common share $ 0.75 $ 0.40
========= =========
Diluted earnings per common share $ 0.61 $ 0.35
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
4
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RENT-A-CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(In Thousands of Dollars) Three months ended March 31,
----------------------------
2000 1999
--------- ---------
Unaudited
<S> <C> <C>
Cash flows from operating activities
Net earnings $ 20,889 $ 12,027
Adjustments to reconcile net earnings to net cash provided by
operating activities
Depreciation of rental merchandise 71,728 64,466
Depreciation of property assets 8,103 7,663
Amortization of intangibles 6,975 6,390
Amortization of financing fees 652 652
Changes in operating assets and liabilities, net of effects
of acquisitions
Rental merchandise (98,726) (68,226)
Accounts receivable - trade (747) 231
Prepaid expenses and other assets 560 1,317
Accounts payable - trade 7,520 11,343
Accrued liabilities 28,599 (24,131)
-------- --------
Net cash provided by operating activities 45,553 11,732
-------- --------
Cash flows from investing activities
Purchase of property assets (8,613) (9,118)
Proceeds from sale of property assets 188 316
Acquisitions of businesses (1,596) --
-------- --------
Net cash used in investing activities (10,021) (8,802)
-------- --------
Cash flows from financing activities
Exercise of stock options 92 649
Proceeds from debt 20,980 11,226
Repayments of debt (64,190) (32,387)
-------- --------
Net cash used in financing activities (43,118) (20,512)
-------- --------
NET DECREASE IN CASH AND CASH
EQUIVALENTS (7,586) (17,582)
Cash and cash equivalents at beginning of period 21,679 33,797
-------- --------
Cash and cash equivalents at end of period $ 14,093 $ 16,215
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
5
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The interim financial statements of Rent-A-Center, Inc. included herein
have been prepared by us pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the Commission's rules and regulations,
although we believe that the disclosures are adequate to make the
information presented not misleading. It is suggested that these financial
statements be read in conjunction with the financial statements and notes
included in our Annual Report on Form 10-K for the year ended December 31,
1999. In our opinion, the accompanying unaudited interim financial
statements contain all adjustments, consisting only of those of a normal
recurring nature, necessary to present fairly our results of operations and
cash flows for the periods presented. The results of operations for the
periods presented are not necessarily indicative of the results to be
expected for the full year.
2. EARNINGS PER SHARE
Basic and diluted earnings per common share is computed based on the
following information:
<TABLE>
<CAPTION>
(In Thousands, except for per share data) Three months ended March 31, 2000
----------------------------------
Net earnings Shares Per share
------------ -------- ---------
<S> <C> <C> <C>
Basic earnings per common share $18,335 24,311 $ 0.75
Effect of dilutive stock options -- 117
Effect of convertible preferred stock 2,554 9,808
------- -------
Diluted earnings per common share $20,889 34,236 $ 0.61
======= ======= ========
</TABLE>
<TABLE>
<CAPTION>
(In Thousands, except for per share data) Three months ended March 31, 1999
----------------------------------
Net earnings Shares Per share
------------ -------- ---------
<S> <C> <C> <C>
Basic earnings per common share $ 9,586 24,115 $ 0.40
Effect of dilutive stock options -- 542
Effect of convertible preferred stock 2,441 9,449
------- -------
Diluted earnings per common share $12,027 34,106 $ 0.35
======= ======= ========
</TABLE>
3. PREFERRED STOCK DIVIDENDS
On March 31, 2000 we paid a 3.75% dividend on our redeemable convertible
voting preferred stock. This dividend was paid through the issuance of
2,566 shares of in-kind preferred stock to holders of record on December
31, 1999.
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4. SUBSIDIARY GUARANTORS
Under our indenture governing the terms of our subordinated notes, our
direct and wholly owned subsidiaries, ColorTyme, Inc. and Advantage
Companies, Inc., have fully, jointly and severally, and unconditionally
guaranteed our obligations under the notes. We have one indirect subsidiary
that is not a guarantor of the notes because it is inconsequential. There
are no restrictions on any of the guarantors to transfer funds to us in the
forms of loans, advances or dividends, except as provided by applicable
law.
The following summarized financial information includes ColorTyme, Inc. and
Advantage Companies, Inc. on a combined basis. Separate financial
statements and other disclosures concerning the guarantors have not been
included because management believes that they are not material to
investors.
<TABLE>
<CAPTION>
Parent Subsidiary
Company Guarantors Eliminations Consolidated
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
(In Thousands of Dollars)
Balance Sheet Data:
March 31, 2000
Rental merchandise, net $ 559,096 $ -- $ -- $ 559,096
Intangible assets, net 334,520 366,587 -- 701,107
Total assets 1,135,788 377,359 (14,459) 1,498,688
Total debt 628,950 -- -- 628,950
Total liabilities 995,942 4,181 -- 1,000,123
December 31, 1999
Rental merchandise, net $ 531,223 $ -- $ -- $ 531,223
Intangible assets, net 337,486 369,838 -- 707,324
Total assets 1,119,360 380,099 (14,459) 1,485,000
Total debt 672,160 -- -- 672,160
Total liabilities 1,002,890 4,518 -- 1,007,408
Statements of Earnings Data:
For the three months ended March 31, 2000
Total revenues $ 378,169 $ 14,357 $ -- $ 392,526
Direct store expenses 303,083 -- -- 303,083
Franchise cost of merchandise sold -- 12,441 -- 12,441
Net earnings (loss) 23,294 (2,405) -- 20,889
For the three months ended March 31, 1999
Total revenues $ 334,450 $ 10,247 $ -- $ 344,697
Direct store expenses 276,812 -- -- 276,812
Franchise cost of merchandise sold -- 8,542 -- 8,542
Net earnings (loss) 14,592 (2,565) -- 12,027
</TABLE>
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
This report contains forward-looking statements that involve risks and
uncertainties. Forward-looking statements generally can be identified by the use
of forward-looking terminology such as "may," "will," "expect," "intend,"
"estimate," "anticipate" or "believe." We believe that the expectations
reflected in these forward-looking statements are accurate. However, we cannot
assure you that these expectations will occur. Our actual future performance
could differ materially from such statements. Factors that could cause or
contribute to these differences include, but are not limited to:
o our ability to acquire additional rent-to-own stores on favorable
terms;
o our ability to enhance the performance of these acquired stores;
o uncertainties regarding the ability to open new stores;
o the passage of legislation adversely affecting the rent-to-own
industry;
o interest rates;
o our ability to collect on our rental purchase agreements at the current
rate; and
o the other risks detailed from time to time in our SEC reports.
You should not unduly rely on these forward-looking statements, which speak only
as of the date of this report. Except as required by law, we are not obligated
to publicly release any revisions to these forward-looking statements to reflect
events or circumstances occurring after the date of this report or to reflect
the occurrence of unanticipated events. Important factors that could cause our
actual results to differ materially from our expectations are discussed under
Risk Factors in our Annual Report on Form 10-K for our fiscal year ended
December 31, 1999. All subsequent written and oral forward-looking statements
attributable to us, or persons acting on our behalf, are expressly qualified in
their entirety by the statements in those sections.
OUR BUSINESS
We are the largest operator in the United States rent-to-own industry with an
approximate 26% market share based on store count. At March 31, 2000, we
operated 2,073 company-owned stores and had 361 franchised stores, providing
high quality durable goods in 50 states, the District of Columbia and Puerto
Rico.
We have pursued an aggressive growth strategy since we were acquired in 1989 by
J. Ernest Talley, our Chairman of the Board and Chief Executive Officer. We have
sought to acquire under-performing stores to which we could apply our operating
strategies. The acquired stores benefit from our administrative network,
improved product mix, sophisticated management information systems and the
greater purchasing power of a larger organization. Since May 1993, our store
base has grown from 27 to 2,073 primarily through acquisitions. During this
period, we acquired over 2,000 company-owned stores and over 300 franchised
stores in more than 60 separate transactions, including six transactions where
we acquired in excess of 70 stores. As a result, we have gained significant
experience in the acquisition and integration of other rent-to-own operators and
believe that the fragmented nature of the industry will result in ongoing growth
opportunities.
RECENT DEVELOPMENTS
During 2000, we resumed our strategy of increasing our store base and annual
revenues and profits through acquisitions. During the first quarter of 2000, we
acquired five stores for approximately $1.6 million in cash in three separate
transactions. As at the date of this report, we have acquired a further nine
stores for approximately $3.9 million in cash in one transaction during the
second quarter of 2000. It is our intention to increase the number of stores in
which we operate by an average of approximately 10-15% per annum over the next
several years.
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Since the acquisition of Central Rents and Thorn Americas in July and
August of 1998, respectively, cashflows from operating activities have continued
to improve. In the three months ended March 31, 2000, we generated positive
cashflow from operations of $45.6 million, despite the continued investment in
new merchandise necessary to achieve the desired product mix in all of our
stores.
Under the terms of our senior credit facility, we were obligated to repay $2.0
million of principal in 1999. However, our stronger than anticipated financial
performance and cash flow position enabled us to meet this obligation and to
pre-pay approximately $35.7 million of our term loans during 1999. In line with
our intentions of making further principal repayments on our senior debt
whenever our cash flow position is sufficiently strong, we re-paid $43.2
million of our term loans during the three months ended March 31, 2000. In
conjunction with these payments, we amended our senior credit facility to allow
us to make our year 2000 principal repayments early. As a result, we only have
an obligation to repay a further $3.0 million of principal in 2000.
In February 2000, we announced that Mr. John Madden would serve as our national
advertising spokesman for our new, fully integrated advertising campaign that
was launched in April 2000. Mr. Madden appears in advertising media used in the
campaign, including television and radio commercials, print, direct response and
in-store signage. We believe that Mr. Madden has a unique balance of
multi-cultural appeal, a strong awareness amongst both men and women, and
possesses a personality that people of all ages enjoy. We believe that he will
help us capture new customers and help us establish a more powerful identity for
Rent-A-Center.
On April 6, 2000, we announced that our board of directors had authorized an
open market share repurchase program of up to an aggregate of $25 million of our
common stock. Under this program, we may, from time to time, purchase shares of
our common stock, subject to market conditions. The share repurchase plan
reflects our belief that, at current prices, our shares are undervalued,
particularly in light of our long-term growth opportunities and our successful
track record in achieving earnings growth through the improvements made in
existing stores. The share repurchase program may be implemented or discontinued
at any time.
On April 25, 2000, we announced that in June 2000, we will begin offering
Internet access to our customers through RentACenter.com. Unlike traditional
Internet Service Providers, this Internet service will be available to customers
on a weekly basis with no long-term commitment. Service can be paid for at any
of our stores across the country without the need for a credit card or a
checking account. We believe that this new service is the only one of its kind
and could establish RentACenter.com as the leading ISP for those who may be
unable to obtain Internet service through existing market participants like
America Online. Access to the Internet through RentACenter.com will be available
to everyone and will not be limited to customers that have a computer or other
item on rent from us. For a price of approximately $5.99 per week, customers
will receive unlimited hours and access to the Internet. In addition,
RentACenter.com will provide complimentary services including e-mail, personal
web space, access to shopping, chat rooms, games and more. We believe our weekly
Internet service will open the door for thousands of middle and lower income
households to gain access to the World Wide Web.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
Total revenue increased by $47.8 million, or 13.9%, to $392.5 million for 2000
from $344.7 million for 1999. The increase in total revenue is directly
attributable to our near singular focus of ensuring a successful integration of
the stores acquired from Central Rents and Thorn Americas. This focus resulted
in same store revenues increasing by $45.8 million, or 14.2%, to $369.2 million
for 2000 from $323.4 million in 1999. Same store revenues represent those
revenues earned in stores that were operated by us for the entire three month
period ending March 31, 2000 and 1999. This improvement was primarily
attributable to an increase in both the number of items on rent and in revenue
earned per item on rent.
Depreciation of rental merchandise increased by $7.3 million, or 11.3%, to $71.7
million for 2000 from $64.5 million for 1999. Depreciation of rental merchandise
expressed as a percent of store rentals and fees revenue decreased from 21.4% in
1999 to 20.5% in 2000. This decrease is primarily attributable to the stores
acquired from Central Rents and Thorn Americas experiencing depreciation rates
of 22.9% and 29.8%, respectively, upon their acquisition in 1998. These rates
have decreased following the implementation of our pricing strategies and
inventory management practices.
Salaries and other expenses expressed as a percentage of total store revenue
decreased to 55.1% for 2000 from 55.7% for 1999. General and administrative
expenses expressed as a percent of total revenue decreased from 3.3% in 1999 to
2.9% in 2000. These decreases are directly attributable to the increased
revenues from the stores acquired from Central Rents and Thorn Americas,
allowing us to leverage our fixed and semi-fixed costs over the larger revenue
base.
Operating profit increased by $16.9 million, or 40.4%, to $58.6 million for 2000
from $41.7 million for 1999. Operating profit as a percentage of total revenue
increased to 14.9% in 2000 from 12.1% in 1999. This increase is attributable to
the improved profitability in the stores acquired from Central Rents and Thorn
Americas.
Net earnings increased by $8.9 million, or 73.7%, to $20.9 million in 2000 from
$12.0 million in 1999.
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LIQUIDITY AND CAPITAL RESOURCES
Our primary liquidity requirements are for debt service under our senior credit
facilities, the subordinated notes, other indebtedness outstanding, working
capital and capital expenditures. At March 31, 2000, we had in place an $791.2
million senior credit facility. The amounts outstanding under our senior credit
facility and our subordinated notes as of this date were approximately $629.0
million and $175.0 million, respectively.
We purchased $133.1 million of rental merchandise during the three months ended
March 31, 2000.
For the three months ended March 31, 2000, cash provided by operating activities
increased by $33.8 million, from $11.7 million in 1999 to $45.6 million in 2000.
This increase was primarily the result of the increased profitability of the
acquired Central Rents and Thorn Americas stores, reductions in the amounts of
acquisition-related liabilities paid in 2000 over 1999, offset by the increased
investment in rental merchandise. Cash used in investing activities increased by
$1.2 million from $8.8 million in 1999 to $10.0 million in 2000. Cash used in
financing activities was $43.1 million in 2000, which represents the reduction
of our senior debt as discussed earlier, compared to $20.5 million of net
repayments made in 1999.
Borrowings under the senior credit facility bear interest at varying rates equal
to 0.25% to 1.75% over the designated prime rate, which was 9.0% per annum at
March 31, 2000, or 1.25% to 2.75% over LIBOR, which was 6.14% at March 31, 2000,
at our option. At March 31, 2000, the average rate on outstanding borrowings was
8.38%. We have entered into certain interest rate protection agreements with two
banks. Under the terms of the interest rate agreements, the LIBOR rate used to
calculate the interest rate charged on $500.0 million of the outstanding senior
term debt has been fixed at an average rate of 5.59%. Individually, these
interest rate agreements have amounts of $250.0 million, $140.0 million, and
$110.0 million, and expire in September 2001, August 2003, and September 2003,
respectively. Borrowings are collateralized by a lien on substantially all of
our assets. A commitment fee equal to 0.25% to 0.50% of the unused portion of
the term loan facility is payable quarterly. The senior credit facility includes
certain net worth and fixed charge coverage requirements, as well as covenants
which restrict additional indebtedness and the disposition of assets not in the
ordinary course of business.
Principal and interest payments under the senior credit facilities, the
subordinated notes, and other indebtedness represent significant liquidity
requirements for us. As of March 31, 2000, we owed approximately $804.0 million
under our various debt agreements and our subordinated notes. Under our various
debt agreements, we will be required to make minimum principal payments totaling
approximately $3.0 million in 2000, $30.1 million in 2001, $33.4 million in
2002, $36.7 million in 2003, and $76.6 million in 2004, plus applicable
interest. Loans under the senior credit facilities not covered by interest rate
swap agreements bear interest at floating rates based upon the interest rate
option selected by us. As discussed earlier, we re-paid $43.2 million of our
senior debt during the first quarter of 2000.
Capital expenditures are made generally to maintain existing operations and for
new capital assets in new and acquired stores. We spent $8.6 million on capital
expenditures during the three months ended March 31, 2000, and expect to spend a
total of approximately $40.0 million on capital expenditures in the year ended
December 31, 2000.
Management is continuing to focus its efforts on enhancing the operations and
the depth of management in the acquired stores. However, we have also resumed
our strategy of increasing our store base and annual revenues and profits
through the opening of new stores, as well as through opportunistic
acquisitions. As of the date of this report, we have acquired 14 stores for $5.5
million in cash in four separate transactions during 2000. It is our intention
to increase the number of stores in which we operate by an average of
approximately 10-15% per year over the next several years.
We plan to accomplish our future growth through selective and opportunistic
acquisitions, with an increasing emphasis on new store development. Typically, a
newly opened store is profitable on a monthly basis in the sixth to seventh
month after its initial opening. Historically, a typical store has achieved
break-even profitability in 12 to 15
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<PAGE> 11
months after its initial opening. Total financing requirements of a typical new
store approximates $0.4 million, with roughly 80% to 85% of that amount relating
to the purchase of rental merchandise inventory. Historically, a newly opened
store has achieved results consistent with other stores that have been operating
within our system for greater than two years by the end of its third year of
operation. There can be no assurance that we will open any new stores in the
future, or as to the number, location or profitability thereof.
We believe that the cashflow generated from operations, together with amounts
available under our senior credit facilities, will be sufficient to fund our
debt service requirements, working capital needs, capital expenditures,
litigation costs, and our store expansion intentions during 2000. At March 31,
2000, we had $111.3 million available under our various debt agreements.
In addition, to provide any additional funds necessary for the continued pursuit
of our operating and growth strategies, we may incur from time to time
additional short or long-term bank indebtedness and may issue, in public or
private transactions, equity and debt securities. The availability and
attractiveness of any outside sources of financing will depend on a number of
factors, some of which will relate to our financial condition and performance,
and some of which will be beyond our control, such as prevailing interest rates
and general economic conditions. There can be no assurance additional financing
will be available, or if available, will be on terms acceptable to us.
EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS
During 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. This statement
establishes accounting and reporting standards requiring that derivative
instruments, including certain derivative instruments imbedded in other
contracts, be recorded in the balance sheet as either an asset or a liability at
its fair value. The statement also requires that changes in the derivative's
fair value be recognized in earnings unless specific hedge accounting criteria
are met. We will adopt SFAS 133 no later than the first quarter of 2001. SFAS
133 is not expected to have a material impact on our consolidated financial
statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
INTEREST RATE SENSITIVITY
As of March 31, 2000, we had $175.0 million in subordinated notes outstanding at
a fixed interest rate of 11.0%. At this date, we also had $581.2 million in term
loans outstanding and $47.8 million outstanding under a multi-draw facility
indexed to the LIBOR rate. The subordinated notes mature on August 15, 2008 and
have a fixed interest rate of 11.0%. The fair value of the subordinated notes is
estimated based on discounted cash flow analysis using interest rates currently
offered for loans with similar terms to borrowers of similar credit quality. The
fair value of the subordinated notes at March 31, 2000 was $173.3 million, which
is $1.7 million below their carrying value. Unlike the subordinated notes, the
$581.2 million in term loans and the $47.8 million outstanding under a
multi-draw facility have variable interest rates indexed to current LIBOR rates.
We entered into $500.0 million in interest rate swap agreements that lock in a
LIBOR rate of 5.59%, hedging the risk of increased interest costs. Individually,
these interest rate agreements have amounts of $250.0 million, $140.0 million,
and $110.0 million, and expire in September 2001, August 2003, and September
2003, respectively. Given the current capital structure, including our interest
rate swap agreements, we have $129.0 million, or 16.0% of our total debt, in
variable rate debt. A hypothetical 1.0% change in the LIBOR rate would affect
pre-tax earnings by approximately $0.3 million for the three month period.
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MARKET RISK
Market risk is the potential change in an instrument's value caused by
fluctuations in interest rates. Our primary market risk exposure is fluctuations
in interest rates. Monitoring and managing this risk is a continual process
carried out by the Board of Directors and senior management. We manage our
market risk based on an ongoing assessment of trends in interest rates and
economic developments, giving consideration to possible effects on both total
return and reported earnings.
INTEREST RATE RISK
We hold long-term debt with variable interest rates indexed to prime or LIBOR
that exposes us to the risk of increased interest costs if interest rates rise.
To reduce the risk related to unfavorable interest rate movements, we have
entered into certain interest rate swap contracts on $500.0 million of debt to
pay a fixed rate of 5.59%.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we, along with our subsidiaries, are party to various legal
proceedings arising in the ordinary course of business. The majority of the
material proceedings involve claims that may be generally characterized into one
of two categories, recharacterization claims and statutory compliance claims.
Recharacterization claims generally involve claims:
o in states that do not have rent-to-own legislation;
o that rent-to-own transactions are disguised installment sales in
violation of applicable state installment statutes; and
o that allege greater damages.
Statutory compliance claims generally involve claims:
o in states that have rent-to-own legislation;
o that the operator failed to comply with applicable state rental
purchase statutes, such as notices and late fees; and
o that allege lesser damages.
Except as described below, we are not currently a party to any material
litigation.
Colon v. Thorn Americas, Inc. The plaintiffs filed this class action in November
1997 in New York state court. Thorn Americas removed the case to the U.S.
District Court for the Southern District of New York. Plaintiffs filed a motion
to remand, which was granted. The plaintiffs acknowledge that rent-to-own
transactions in New York are subject to the provisions of New York's Rental
Purchase Statute but contend the Rental Purchase Statute does not provide Thorn
Americas immunity from suit for other statutory violations. Plaintiffs allege
Thorn Americas has a duty to disclose effective interest under New York consumer
protection laws, and seek damages and injunctive relief for Thorn Americas'
failure to do so. In their prayers for relief, the plaintiffs have requested the
following:
o class certification;
o injunctive relief requiring Thorn Americas to (A) cease certain
marketing practices, (B) price their rental purchase contracts in
certain ways, and (C) disclose effective interest;
o unspecified compensatory and punitive damages;
o rescission of the class members contracts;
o an order placing in trust all moneys received by Thorn Americas in
connection with the rental of merchandise during the class period;
o treble damages, attorney's fees, filing fees and costs of suit;
o pre- and post-judgment interest; and
o any further relief granted by the court.
This suit also alleges violations relating to late fees, harassment, undisclosed
charges, and the ease of use and accuracy of its payment records. The plaintiffs
did not specify a specific amount on their damages request.
The proposed class includes all New York residents who were party to Thorn
Americas' rent-to-own contracts from November 26, 1991 through November 26,
1997. We are vigorously defending this action and on September 24, 1998, filed
motions to deny class certification and dismiss the complaint. Plaintiff
responded and filed a motion for summary judgment asking the court to declare
that the transaction includes an undisclosed interest component. The court
denied our motion to dismiss and plaintiffs' motion for summary judgement on
August 24, 1999. Both sides are appealing the court's ruling to the Appellate
Division. The appeal is scheduled for oral argument in June 2000. There can be
no assurance that our position will prevail, or that we will be found not to
have any liability. This matter was assumed by us pursuant to the Thorn Americas
acquisition, and appropriate purchase accounting adjustments were made for such
contingent liabilities.
12
<PAGE> 13
Murray v. Rent-A-Center, Inc. In May 1999, the plaintiffs filed a putative
nationwide class action in federal court in Missouri, alleging that we have
discriminated against African Americans in our hiring, compensation, promotion
and termination policies. Plaintiffs alleged no specific amount of damages in
their complaint. We have filed an answer in the matter denying plaintiffs'
allegations and intend to vigorously defend this action. No discovery in this
litigation has occurred to date. Members of the regional class defined in our
completed settlement of the Allen v. Thorn Americas, Inc. litigation would not
be included in the Murray case. We believe plaintiffs' claims in this suit are
without merit. However, given the early stage of this proceeding, there can be
no assurance that we will be found to have no liability.
Otero v. Rent-A-Center, Inc. In September 1999, the plaintiff filed this
putative class action in Los Angeles Superior Court in California alleging our
classification of and pay to our executive assistant managers and our
inside/outside managers is contrary to California wage and hour laws. In March
2000, we settled this matter in principle for approximately $3.1 million.
Robinson v. Thorn Americas, Inc., Gallagher v. Crown Leasing Corporation, and
Michelle Newhouse v. Rent-A-Center, Inc./Handy Boykin v. Rent-A-Center, Inc. In
December 1991, January 1996, and November 1997, respectively, we were served
with three class action lawsuits in New Jersey. The details of these individual
cases were fully described in the Legal Proceedings section of our Annual Report
on Form 10-K for the year ended December 31, 1999. The Robinson matter was
assumed by us pursuant to the Thorn Americas acquisition, and appropriate
purchase accounting adjustments were made for such contingent liabilities. All
three of these matters were settled in principle in December 1998 for
approximately $60.0 million less certain amounts to be refunded to us based on
unlocated class members, subject to preliminary and final approval of the court.
Final approval of the court occurred on October 13, 1999. We funded the
settlement in November 1999, and as of March 31, 2000, we had received refunds
totaling approximately $11.0 million. We expect additional refunds as a result
of unlocated class members pursuant to the settlement agreement. However, we are
unable to reasonably estimate such amounts at this time.
13
<PAGE> 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
CURRENT REPORTS ON FORM 8-K.
None.
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<S> <C>
2.1(1) -- Asset Purchase Agreement, dated May 1, 1998, by and among Renters
Choice, Inc., Central Rents, Inc., Central Rents Holding, Inc. and
Banner Holdings, Inc. (Pursuant to the rules of the Commission, the
schedules and exhibits have been omitted. Upon the request of the
Commission, Renters Choice will supplementally supply such schedules
and exhibits to the Commission.)
2.2(2) -- Letter Agreement, dated as of May 26, 1998, by and among Renters
Choice, Inc., Central Rents, Inc., Central Rents Holding, Inc. and
Banner Holdings, Inc. (Pursuant to the rules of the Commission, the
schedules and exhibits have been omitted. Upon the request of the
Commission, Renters Choice will supplementally supply such schedules
and exhibits to the Commission.)
2.3(3) -- Stock Purchase Agreement, dated as of June 16, 1998, among
Renters Choice, Inc., Thorn International BV and Thorn plc (Pursuant
to the rules of the Commission, the schedules and exhibits have been
omitted. Upon the request of the Commission, the Company will
supplementally supply such schedules and exhibits to the
Commission.)
3.1(4) -- Amended and Restated Certificate of Incorporation of Renters
Choice
3.2(5) -- Certificate of Amendment to the Amended and Restated Certificate
of Incorporation of Renters Choice
3.3(6) -- Amended and Restated Bylaws of Rent-A-Center
4.1(7) -- Form of Certificate evidencing Common Stock
4.2(8) -- Certificate of Designations, Preferences and Relative Rights and
Limitations of Series A Preferred Stock of Renters Choice, Inc.
4.3(9) -- Certificate of Designations, Preferences and Relative Rights and
Limitations of Series B Preferred Stock of Renters Choice, Inc.
4.4(10) -- Indenture, dated as of August 18, 1998, by and among Renters
Choice, Inc., as Issuer, ColorTyme, Inc. and Rent-A-Center, Inc., as
Subsidiary Guarantors, and IBJ Schroder Bank & Trust Company, as
Trustee
4.5(11) -- Form of Certificate evidencing Series A Preferred Stock
4.6(12) -- Form of Exchange Note
4.7(13) -- First Supplemental Indenture, dated as of December 31, 1998, by
and among Renters Choice Inc., Rent-A-Center, Inc., ColorTyme, Inc.,
Advantage Companies, Inc. and IBJ Schroder Bank & Trust Company, as
Trustee.
10.1(14) -- Amended and Restated 1994 Renters Choice, Inc. Long-Term
Incentive Plan
10.2(15) -- Credit Agreement, dated August 5, 1998, among Renters Choice,
Inc., Comerica Bank, as Documentation Agent, NationsBank N.A., as
Syndication Agent, and The Chase Manhattan Bank, as Administrative
Agent, and certain other lenders
10.3(16) -- First Amendment, dated as of February 25, 2000, to the
Credit Agreement, dated August 5, 1998, among Rent-A-Center, Inc.
(formerly known as Renters Choice, Inc.), Comerica Bank, as
Documentation Agent, NationsBank N.A., as Syndication Agent, and the
Chase Manhattan Bank, as Administrative Agent, and certain other
lenders
10.4(17) -- Guarantee and Collateral Agreement, dated August 5, 1998, made by
Renters Choice, Inc., and certain of its Subsidiaries in favor of
the Chase Manhattan Bank, as Administrative Agent
10.5(18) -- $175,000,000 Senior Subordinated Credit Agreement, dated as of
August 5, 1998, among Renters Choice, Inc., certain other lenders
and the Chase Manhattan Bank
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<S> <C>
10.6(19) -- Stockholders Agreement, dated as of August 5, 1998, by and among
Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P.,
J. Ernest Talley, Mark E. Speese, Renters Choice, Inc., and certain
other persons
10.7(20) -- Agreements to be Bound to Stockholders Agreement, each dated
September 9, 1999, by and among Apollo Investment Fund IV, L.P.,
Apollo Overseas Partners IV, L.P., J. Ernest Talley, Mark E. Speese,
Rent-A-Center, Inc. and certain other persons.
10.8(21) -- Registration Rights Agreement, dated August 5, 1998, by and
between Renters Choice, Inc., Apollo Investment Fund IV, L.P., and
Apollo Overseas Partners IV, L.P., related to the Series A
Convertible Preferred Stock
10.9(22) -- Registration Rights Agreement, dated August 5, 1998, by and
between Renters Choice, Inc., Apollo Investment Fund IV, L.P., and
Apollo Overseas Partners IV, L.P., related to the Series B
Convertible Preferred Stock
10.10(23) -- Stock Purchase Agreement, dated August 5, 1998, among Renters
Choice, Inc., Apollo Investment Fund IV, L.P. and Apollo Overseas
Partners IV, L.P.
10.11(24) -- Exchange and Registration Rights Agreement, dated August 18,
1998, by and among Renters Choice, Inc. and Chase Securities Inc.,
Bear, Stearns & Co. Inc., NationsBanc Montgomery Securities LLC and
Credit Suisse First Boston Corporation
10.12(25) -- Employment Agreement, dated October 1, 1998, by and between
Rent-A-Center, Inc. and Bradley W. Denison
27.1* -- Financial Data Schedule
</TABLE>
- ----------
* Filed herewith.
(1) Incorporated herein by reference to Exhibit 2.1 to the registrant's
Current Report on Form 8-K dated May 28, 1998
(2) Incorporated herein by reference to Exhibit 2.2 to the registrant's
Current Report on Form 8-K dated May 28, 1998
(3) Incorporated herein by reference to Exhibit 2.9 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(4) Incorporated herein by reference to Exhibit 3.2 to the registrant's
Annual Report on Form 10-K for the year ended December 31, 1994
(5) Incorporated herein by reference to Exhibit 3.2 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996
(6) Incorporated herein by reference to Exhibit 3.2 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1999
(7) Incorporated herein by reference to Exhibit 4.1 to the registrant's
Form S-4 filed on January 19, 1999.
(8) Incorporated herein by reference to Exhibit 4.2 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(9) Incorporated herein by reference to Exhibit 4.3 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(10) Incorporated herein by reference to Exhibit 4.4 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
15
<PAGE> 16
(11) Incorporated herein by reference to Exhibit 4.5 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(12) Incorporated herein by reference to Exhibit 4.6 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(13) Incorporated herein by reference to Exhibit 4.7 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(14) Incorporated herein by reference to Exhibit 99.1 to the registrant's
Registration Statement on Form S-8 (File No. 333- 53471)
(15) Incorporated herein by reference to Exhibit 10.18 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(16) Incorporated herein by reference to Exhibit 10.3 to the registrant's
Annual Report on Form 10-K for the year ended December 31, 1999
(17) Incorporated herein by reference to Exhibit 10.19 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(18) Incorporated herein by reference to Exhibit 10.20 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(19) Incorporated herein by reference to Exhibit 10.21 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(20) Incorporated herein by reference to Exhibit 10.7 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1998
(21) Incorporated herein by reference to Exhibit 10.22 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(22) Incorporated herein by reference to Exhibit 10.23 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(23) Incorporated herein by reference to Exhibit 2.10 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(24) Incorporated herein by reference to Exhibit 10.14 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(25) Incorporated herein by reference to Exhibit 10.15 to the registrant's
Annual Report on Form 10-K for the year ended December 31, 1998
- ----------
* Filed herewith.
16
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this Report to be signed on its behalf by the
undersigned duly authorized officer.
RENT-A-CENTER, INC.
By: /s/ Robert D. Davis
--------------------------------
Robert D. Davis
Senior Vice President-Finance
and Chief Financial Officer
Date: May 9, 2000
Rent-A-Center, Inc.
17
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<S> <C>
2.1(1) -- Asset Purchase Agreement, dated May 1, 1998, by and among Renters
Choice, Inc., Central Rents, Inc., Central Rents Holding, Inc. and
Banner Holdings, Inc. (Pursuant to the rules of the Commission, the
schedules and exhibits have been omitted. Upon the request of the
Commission, Renters Choice will supplementally supply such schedules
and exhibits to the Commission.)
2.2(2) -- Letter Agreement, dated as of May 26, 1998, by and among Renters
Choice, Inc., Central Rents, Inc., Central Rents Holding, Inc. and
Banner Holdings, Inc. (Pursuant to the rules of the Commission, the
schedules and exhibits have been omitted. Upon the request of the
Commission, Renters Choice will supplementally supply such schedules
and exhibits to the Commission.)
2.3(3) -- Stock Purchase Agreement, dated as of June 16, 1998, among
Renters Choice, Inc., Thorn International BV and Thorn plc (Pursuant
to the rules of the Commission, the schedules and exhibits have been
omitted. Upon the request of the Commission, the Company will
supplementally supply such schedules and exhibits to the
Commission.)
3.1(4) -- Amended and Restated Certificate of Incorporation of Renters
Choice
3.2(5) -- Certificate of Amendment to the Amended and Restated Certificate
of Incorporation of Renters Choice
3.3(6) -- Amended and Restated Bylaws of Rent-A-Center
4.1(7) -- Form of Certificate evidencing Common Stock
4.2(8) -- Certificate of Designations, Preferences and Relative Rights and
Limitations of Series A Preferred Stock of Renters Choice, Inc.
4.3(9) -- Certificate of Designations, Preferences and Relative Rights and
Limitations of Series B Preferred Stock of Renters Choice, Inc.
4.4(10) -- Indenture, dated as of August 18, 1998, by and among Renters
Choice, Inc., as Issuer, ColorTyme, Inc. and Rent-A-Center, Inc., as
Subsidiary Guarantors, and IBJ Schroder Bank & Trust Company, as
Trustee
4.5(11) -- Form of Certificate evidencing Series A Preferred Stock
4.6(12) -- Form of Exchange Note
4.7(13) -- First Supplemental Indenture, dated as of December 31, 1998, by
and among Renters Choice Inc., Rent-A-Center, Inc., ColorTyme, Inc.,
Advantage Companies, Inc. and IBJ Schroder Bank & Trust Company, as
Trustee.
10.1(14) -- Amended and Restated 1994 Renters Choice, Inc. Long-Term
Incentive Plan
10.2(15) -- Credit Agreement, dated August 5, 1998, among Renters Choice,
Inc., Comerica Bank, as Documentation Agent, NationsBank N.A., as
Syndication Agent, and The Chase Manhattan Bank, as Administrative
Agent, and certain other lenders
10.3(16) -- First Amendment, dated as of February 25, 2000, to the
Credit Agreement, dated August 5, 1998, among Rent-A-Center, Inc.
(formerly known as Renters Choice, Inc.), Comerica Bank, as
Documentation Agent, NationsBank N.A., as Syndication Agent, and the
Chase Manhattan Bank, as Administrative Agent, and certain other
lenders
10.4(17) -- Guarantee and Collateral Agreement, dated August 5, 1998, made by
Renters Choice, Inc., and certain of its Subsidiaries in favor of
the Chase Manhattan Bank, as Administrative Agent
10.5(18) -- $175,000,000 Senior Subordinated Credit Agreement, dated as of
August 5, 1998, among Renters Choice, Inc., certain other lenders
and the Chase Manhattan Bank
10.6(19) -- Stockholders Agreement, dated as of August 5, 1998, by and among
Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P.,
J. Ernest Talley, Mark E. Speese, Renters Choice, Inc., and certain
other persons
10.7(20) -- Agreements to be Bound to Stockholders Agreement, each dated
September 9, 1999, by and among Apollo Investment Fund IV, L.P.,
Apollo Overseas Partners IV, L.P., J. Ernest Talley, Mark E. Speese,
Rent-A-Center, Inc. and certain other persons.
10.8(21) -- Registration Rights Agreement, dated August 5, 1998, by and
between Renters Choice, Inc., Apollo Investment Fund IV, L.P., and
Apollo Overseas Partners IV, L.P., related to the Series A
Convertible Preferred Stock
</TABLE>
<PAGE> 19
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<S> <C>
10.9(22) -- Registration Rights Agreement, dated August 5, 1998, by and
between Renters Choice, Inc., Apollo Investment Fund IV, L.P., and
Apollo Overseas Partners IV, L.P., related to the Series B
Convertible Preferred Stock
10.10(23) -- Stock Purchase Agreement, dated August 5, 1998, among Renters
Choice, Inc., Apollo Investment Fund IV, L.P. and Apollo Overseas
Partners IV, L.P.
10.11(24) -- Exchange and Registration Rights Agreement, dated August 18,
1998, by and among Renters Choice, Inc. and Chase Securities Inc.,
Bear, Stearns & Co. Inc., NationsBanc Montgomery Securities LLC and
Credit Suisse First Boston Corporation
10.12(25) -- Employment Agreement, dated October 1, 1998, by and between
Rent-A-Center, Inc. and Bradley W. Denison
27.1* -- Financial Data Schedule
</TABLE>
- ----------
* Filed herewith.
(1) Incorporated herein by reference to Exhibit 2.1 to the registrant's
Current Report on Form 8-K dated May 28, 1998
(2) Incorporated herein by reference to Exhibit 2.2 to the registrant's
Current Report on Form 8-K dated May 28, 1998
(3) Incorporated herein by reference to Exhibit 2.9 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(4) Incorporated herein by reference to Exhibit 3.2 to the registrant's
Annual Report on Form 10-K for the year ended December 31, 1994
(5) Incorporated herein by reference to Exhibit 3.2 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996
(6) Incorporated herein by reference to Exhibit 3.2 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1999
(7) Incorporated herein by reference to Exhibit 4.1 to the registrant's
Form S-4 filed on January 19, 1999.
(8) Incorporated herein by reference to Exhibit 4.2 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(9) Incorporated herein by reference to Exhibit 4.3 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(10) Incorporated herein by reference to Exhibit 4.4 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(11) Incorporated herein by reference to Exhibit 4.5 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(12) Incorporated herein by reference to Exhibit 4.6 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(13) Incorporated herein by reference to Exhibit 4.7 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
<PAGE> 20
(14) Incorporated herein by reference to Exhibit 99.1 to the registrant's
Registration Statement on Form S-8 (File No. 333- 53471)
(15) Incorporated herein by reference to Exhibit 10.18 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(16) Incorporated herein by reference to Exhibit 10.3 to the registrant's
Annual Report on Form 10-K for the year ended December 31, 1999
(17) Incorporated herein by reference to Exhibit 10.19 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(18) Incorporated herein by reference to Exhibit 10.20 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(19) Incorporated herein by reference to Exhibit 10.21 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(20) Incorporated herein by reference to Exhibit 10.7 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1998
(21) Incorporated herein by reference to Exhibit 10.22 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(22) Incorporated herein by reference to Exhibit 10.23 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(23) Incorporated herein by reference to Exhibit 2.10 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(24) Incorporated herein by reference to Exhibit 10.14 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(25) Incorporated herein by reference to Exhibit 10.15 to the registrant's
Annual Report on Form 10-K for the year ended December 31, 1998
- ----------
* Filed herewith.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF EARNINGS
FOUND ON PAGES 3 AND 4 OF OUR FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31,
2000.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 14,093
<SECURITIES> 0
<RECEIVABLES> 4,643
<ALLOWANCES> 13
<INVENTORY> 100,901<F1>
<CURRENT-ASSETS> 0<F2>
<PP&E> 138,621
<DEPRECIATION> 55,806
<TOTAL-ASSETS> 1,498,688
<CURRENT-LIABILITIES> 0<F2>
<BONDS> 175,000
273,468
0
<COMMON> 253
<OTHER-SE> 224,844<F3>
<TOTAL-LIABILITY-AND-EQUITY> 1,498,688
<SALES> 40,230<F4>
<TOTAL-REVENUES> 392,526
<CGS> 35,271<F5>
<TOTAL-COSTS> 315,524
<OTHER-EXPENSES> 18,450<F6>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,008
<INCOME-PRETAX> 39,801
<INCOME-TAX> 18,912
<INCOME-CONTINUING> 20,889
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,889
<EPS-BASIC> 0.75
<EPS-DILUTED> 0.61
<FN>
<F1>RENTAL MERCHANDISE, HELD FOR RENT.
<F2>BALANCE SHEET IS UNCLASSIFIED.
<F3>ADDITIONAL PAID IN CAPITAL, RETAINED EARNINGS AND TREASURY STOCK.
<F4>STORE AND FRANCHISE MERCHANDISE SALES.
<F5>STORE AND FRANCHISE COST OF MERCHANDISE SOLD.
<F6>GENERAL AND ADMINISTRATIVE EXPENSE AND AMORTIZATION OF INTANGIBLES.
</FN>
</TABLE>
