<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 September 30, 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 November 6, 2000:
Class Outstanding
-------------------------------------- -----------
Common stock, $.01 par value per share 24,691,359
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
--------------------- --------
<S> <C>
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of September 30, 2000 and December 31, 1999 3
Consolidated Statements of Earnings for the nine months ended 4
September 30, 2000 and 1999
Consolidated Statements of Earnings for the three months ended 5
September 30, 2000 and 1999
Consolidated Statements of Cash Flows for the nine months ended 6
September 30, 2000 and 1999
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition 9
and Results of Operations
Item 3. Quantitative and Qualitative Disclosure About Market Risk 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES
Exhibit 27.1
</TABLE>
2
<PAGE> 3
RENT-A-CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(In Thousands of Dollars) September 30, December 31,
2000 1999
------------- ------------
Unaudited
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 50,154 $ 21,679
Rental merchandise, net
On rent 460,921 425,469
Held for rent 113,145 105,754
Accounts receivable - trade 3,294 3,883
Prepaid expenses and other assets 32,914 27,867
Property assets, net 82,936 82,657
Deferred income taxes 50,889 110,367
Intangible assets, net 713,541 707,324
----------- -----------
$ 1,507,794 $ 1,485,000
=========== ===========
LIABILITIES
Senior debt $ 616,051 $ 672,160
Subordinated notes payable 175,000 175,000
Accounts payable - trade 57,389 53,452
Accrued liabilities 96,487 106,796
----------- -----------
944,927 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; 276,547 and 271,426 shares issued
and outstanding in 2000 and 1999, respectively 278,601 270,902
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; 50,000,000 shares authorized; 25,597,958 and
25,297,458 shares issued in 2000 and 1999, respectively 256 253
Additional paid-in capital 111,420 105,627
Retained earnings 197,590 125,810
----------- -----------
309,266 231,690
Treasury stock, 990,099 shares at cost in 2000 and 1999 (25,000) (25,000)
----------- -----------
284,266 206,690
----------- -----------
$ 1,507,794 $ 1,485,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
RENT-A-CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
(In Thousands of Dollars, except per share data) Nine months ended September 30,
-------------------------------
2000 1999
----------- ------------
<S> <C> <C>
Revenues Unaudited
Store
Rentals and fees $ 1,082,949 $ 935,985
Merchandise sales 63,906 70,841
Other 1,916 1,724
Franchise
Merchandise sales 36,355 33,499
Royalty income and fees 4,613 4,488
----------- -----------
1,189,739 1,046,537
Operating expenses
Direct store expenses
Depreciation of rental merchandise 222,545 196,815
Cost of merchandise sold 51,744 59,002
Salaries and other expenses 639,041 569,916
Franchise cost of merchandise sold 35,049 32,493
----------- -----------
948,379 858,226
General and administrative expenses 36,189 31,770
Amortization of intangibles 21,098 20,091
Class action litigation settlements (22,383) --
----------- -----------
Total operating expenses 983,283 910,087
Operating profit 206,456 136,450
Interest expense 56,284 56,224
Interest income (1,094) (391)
----------- -----------
Earnings before income taxes 151,266 80,617
Income tax expense 71,852 39,102
----------- -----------
NET EARNINGS 79,414 41,515
Preferred dividends 7,764 7,473
----------- -----------
Net earnings allocable to common stockholders $ 71,650 $ 34,042
=========== ===========
Basic earnings per common share $ 2.94 $ 1.41
=========== ===========
Diluted earnings per common share $ 2.30 $ 1.22
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
RENT-A-CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
(In Thousands of Dollars, except per share data) Three months ended September 30,
--------------------------------
2000 1999
--------- ---------
<S> <C> <C>
Revenues Unaudited
Store
Rentals and fees $ 372,402 $ 318,119
Merchandise sales 18,887 18,662
Other 922 404
Franchise
Merchandise sales 11,143 11,679
Royalty income and fees 1,614 1,556
--------- ---------
404,968 350,420
Operating expenses
Direct store expenses
Depreciation of rental merchandise 77,014 65,911
Cost of merchandise sold 14,348 15,664
Salaries and other expenses 219,195 191,804
Franchise cost of merchandise sold 10,815 11,316
--------- ---------
321,372 284,695
General and administrative expenses 12,708 9,920
Amortization of intangibles 7,168 6,845
--------- ---------
Total operating expenses 341,248 301,460
Operating profit 63,720 48,960
Interest expense 18,915 18,717
Interest income (720) (54)
--------- ---------
Earnings before income taxes 45,525 30,297
Income tax expense 21,624 14,700
--------- ---------
NET EARNINGS 23,901 15,597
Preferred dividends 2,631 2,542
--------- ---------
Net earnings allocable to common stockholders $ 21,270 $ 13,055
========= =========
Basic earnings per common share $ 0.87 $ 0.54
========= =========
Diluted earnings per common share $ 0.68 $ 0.46
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
RENT-A-CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine months ended September 30,
-------------------------------
(In Thousands of Dollars) 2000 1999
---------- ----------
Unaudited
<S> <C> <C>
Cash flows from operating activities
Net earnings $ 79,414 $ 41,515
Adjustments to reconcile net earnings to net cash provided
by (used in) operating activities
Depreciation of rental merchandise 222,545 196,815
Depreciation of property assets 24,662 23,304
Amortization of intangibles 21,098 20,091
Amortization of financing fees 2,015 1,956
Changes in operating assets and liabilities, net of effects of
acquisitions
Rental merchandise (252,954) (258,773)
Accounts receivable - trade 588 (65)
Prepaid expenses and other assets (7,042) 12,326
Deferred income taxes 59,478 43,097
Accounts payable - trade 3,957 21
Accrued liabilities (11,062) (55,684)
---------- ----------
Net cash provided by operating activities 142,699 24,603
---------- ----------
Cash flows from investing activities
Purchase of property assets (25,027) (32,588)
Proceeds from sale of property assets 1,071 8,501
Acquisitions of businesses, net of cash acquired (39,955) --
---------- ----------
Net cash used in investing activities (63,911) (24,087)
---------- ----------
Cash flows from financing activities
Exercise of stock options 5,796 3,245
Proceeds from debt 229,985 157,175
Repayments of debt (286,094) (179,535)
---------- ----------
Net cash used in financing activities (50,313) (19,115)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 28,475 (18,599)
Cash and cash equivalents at beginning of period 21,679 33,797
---------- ----------
Cash and cash equivalents at end of period $ 50,154 $ 15,198
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
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. Some of the 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, and our Quarterly Reports on Form 10-Q for the three months ended
March 31, 2000, and six months ended June 30, 2000. 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 per share data) Three months ended September 30, 2000
-----------------------------------------
Net earnings Shares Per share
------------ ---------- ----------
<S> <C> <C> <C>
Basic earnings per common share $ 21,270 24,404 $ 0.87
Effect of dilutive stock options -- 809
Effect of convertible preferred stock 2,631 9,900
---------- ----------
Diluted earnings per common share $ 23,901 35,113 $ 0.68
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
(In Thousands, except for per share data) Three months ended September 30, 1999
-----------------------------------------
Net earnings Shares Per share
------------ ---------- ----------
<S> <C> <C> <C>
Basic earnings per common share $ 13,055 24,295 $ 0.54
Effect of dilutive stock options -- 195
Effect of convertible preferred stock 2,542 9,625
---------- ----------
Diluted earnings per common share $ 15,597 34,115 $ 0.46
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
(In Thousands, except for per share data) Nine months ended September 30, 2000
-----------------------------------------
Net earnings Shares Per share
------------ ---------- ----------
<S> <C> <C> <C>
Basic earnings per common share $ 71,650 24,347 $ 2.94
Effect of dilutive stock options -- 276
Effect of convertible preferred stock 7,764 9,978
---------- ----------
Diluted earnings per common share $ 79,414 34,601 $ 2.30
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
(In Thousands, except for per share data) Nine months ended September 30, 1999
-----------------------------------------
Net earnings Shares Per share
------------ ---------- ----------
<S> <C> <C> <C>
Basic earnings per common share $ 34,042 24,204 $ 1.41
Effect of dilutive stock options -- 367
Effect of convertible preferred stock 7,473 9,538
---------- ----------
Diluted earnings per common share $ 41,515 34,109 $ 1.22
========== ========== ==========
</TABLE>
7
<PAGE> 8
3. 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:
September 30, 2000
Rental merchandise, net $ 574,066 $ -- $ -- $ 574,066
Intangible assets, net 353,459 360,082 -- 713,541
Total assets 1,147,362 374,891 (14,459) 1,507,794
Total debt 616,051 -- -- 616,051
Total liabilities 938,577 6,350 -- 944,927
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 nine months ended September 30, 2000
Total revenues $1,148,771 $ 40,968 $ -- $1,189,739
Direct store expenses 913,330 -- -- 913,330
Franchise cost of merchandise sold -- 35,049 -- 35,049
Net earnings (loss) 86,455 (7,041) -- 79,414
For the nine months ended September 30, 1999
Total revenues $1,008,550 $ 37,987 $ -- $1,046,537
Direct store expenses 825,733 -- -- 825,733
Franchise cost of merchandise sold -- 32,493 -- 32,493
Net earnings (loss) 39,549 1,966 -- 41,515
For the three months ended September 30, 2000
Total revenues $ 392,211 $ 12,757 $ -- $ 404,968
Direct store expenses 310,557 -- -- 310,557
Franchise cost of merchandise sold -- 10,815 -- 10,815
Net earnings (loss) 26,183 (2,282) -- 23,901
For the three months ended September 30, 1999
Total revenues $ 337,186 $ 13,234 $ -- $ 350,420
Direct store expenses 273,379 -- -- 273,379
Franchise cost of merchandise sold -- 11,316 -- 11,316
Net earnings (loss) 14,796 801 -- 15,597
</TABLE>
8
<PAGE> 9
4. PREFERRED STOCK DIVIDENDS
On September 29, 2000 we paid a 3.75% dividend on our redeemable convertible
voting preferred stock. This dividend was paid through the issuance of 2,579
shares of in-kind preferred stock to holders of record on June 30, 2000.
5. CLASS ACTION LITIGATION SETTLEMENTS
In December 1991, January 1996, and November 1997, 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. We settled these
matters in principle in December 1998 for approximately $60.0 million less
certain amounts to be refunded to us based on unlocated class members. We
assumed one of these matters pursuant to the Thorn Americas acquisition,
and appropriate amounts were recorded for these liabilities at the date of
aquisition. In the fourth quarter of 1998, we recognized an $11.5 million
charge as a class action litigation settlement for the other two matters.
Under the terms of the settlement, we were entitled to receive refunds for
unlocated class members. As of June 30, 2000, we had received refunds
totaling approximately $22.4 million. These refunds are presented in the
nine months ended September 30, 2000, as a class action litigation
settlement gain.
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.
9
<PAGE> 10
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 September 30, 2000, we
operated 2,116 company-owned stores and had 365 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 2,116 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
In June, 2000, we began offering Internet access to our customers through
RentACenter.com. Unlike traditional internet service providers, this Internet
service is available to customers on a weekly basis with no long-term
commitment. Service is 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 is available to everyone where local service is available, and
not limited to customers that have a computer or other item on rent from us. For
a price of $5.99 per week, customers receive unlimited hours and access to the
Internet. In addition, RentACenter.com provides 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.
During 2000, we resumed our strategy of increasing our store base and annual
revenues and profits through acquisitions. During the third quarter of 2000, we
acquired 28 stores for approximately $10.5 million in cash in nine separate
transactions, for a total of 63 stores acquired for the first nine months of
2000. In addition, we opened three new stores in the third quarter of 2000. As
of the date of this report, we have acquired a further eight stores for
approximately $1.65 million in cash and opened an additional 10 new stores
during the fourth quarter of 2000. We believe that there are attractive
opportunities to expand our presence in the rent-to-own industry. We have been
working over the past few months to develop an acquisition pipeline, as well as
target specific sites for new store locations. As a result of these efforts,
together with the refinancing of a portion of our debt, we believe that we will
be able to complete our goal of adding a total of approximately 100 stores to
our store base in 2000.
On June 29, 2000, we refinanced a portion of our senior credit facility. Through
a syndicated bank offering led by Chase Securities, Inc., we were provided with
a new $125 million Term D tranche to our existing facility. No significant
mandatory principal repayments are required on the Term D facility until the
tranche becomes due in 2007. Borrowings under the Term D facility bear interest
at 1.75% over the designated prime rate (9.50% at September 30, 2000) or 2.75%
over LIBOR (6.66% at September 30, 2000) at our option. Approximately $89
million of the proceeds were used to repay our existing Term A tranche of the
facility, which required significant principal repayments over the next four
years. As a result of this refinancing, our mandatory principal repayments for
the next four years have been significantly curtailed, enabling us to more
efficiently deploy our capital to fund our store expansion plans through
internally generated cashflow.
10
<PAGE> 11
RESULTS OF OPERATIONS
COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
Total revenue increased by $143.2 million, or 13.7%, to $1,189.7 million for
2000 from $1,046.5 million for 1999. The increase in total revenue is directly
attributable to the success of our efforts on improving store operations through
an increase in the number of units on rent, average price per unit and
incremental revenues through acquisitions. This growth in revenues resulted in
same store revenues increasing by $129.7 million, or 13.6% to $1,080.1 million
for 2000 from $950.4 million in 1999. Same store revenues represent those
revenues earned in stores that were operated by us for the entire nine-month
periods ending September 30, 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 $25.7 million, or 13.1%, to
$222.5 million for 2000 from $196.8 million for 1999. Depreciation of rental
merchandise expressed as a percentage of store rentals and fee revenue decreased
from 21.0% in 1999 to 20.5% in 2000. These decreases have resulted from the
implementation of our pricing strategies and inventory management practices.
Salaries and other expenses expressed as a percentage of total store revenue
decreased to 55.7% for 2000 from 56.6% for 1999. This decrease is a result of
leveraging fixed and semi-fixed costs over a larger revenue base. General and
administrative expenses expressed as a percentage of total revenue remained
constant at 3.0% in 2000 and 1999.
Operating profit, before the pre-tax non-recurring class action litigation
settlement refund of $22.4 million, increased by $47.6 million, or 34.9%, to
$184.1 million for 2000 from $136.5 million for 1999, and, as a percentage of
total revenue, increased to 15.5% in 2000 from 13.0% in 1999. The increases are
attributable to the improved profitability of the stores acquired from Central
Rents and Thorn Americas. Including the class action litigation settlement
refund, operating profit was $206.5 million in 2000.
Net earnings, before the after-tax effect of the class action litigation
settlement refund, increased by $15.5 million, or 37.4%, to $57.0 million in
2000 from $41.5 million in 1999. Net earnings were $79.4 million in 2000 after
the settlement refund.
COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
Total revenue increased by $54.5 million, or 15.6%, to $404.9 million for 2000
from $350.4 million for 1999. The increase in total revenue is directly
attributable to the success of our efforts on improving store operations through
an increase in the number of units on rent, average price per unit and
incremental revenues through acquisitions. This growth in revenues resulted in
same store revenues increasing by $45.7 million, or 14.0%, to $372.6 million for
2000 from $326.9 million in 1999. Same store revenues represent those revenues
earned in stores that were operated by us for the entire three-month period
ending September 30, 2000 and 1999. This improvement was primarily attributable
to an increase in both the number of items on rent and in revenue earned per
unit on rent.
Depreciation of rental merchandise increased by $11.1 million, or 16.8%, to
$77.0 million for 2000 from $65.9 million for 1999. Depreciation of rental
merchandise as a percentage of store rentals and fee revenue remained constant
at 20.7% for 2000 and 1999.
Salaries and other expenses as a percentage of total store revenue decreased to
56.0% for 2000 from 56.9% for 1999. This decrease is a result of leveraging
fixed and semi-fixed costs over a larger revenue base. General and
administrative expenses expressed as a percentage of total revenue increased to
3.1% in 2000 from 2.8% in 1999. This increase is primarily attributable to
increased overhead costs related to the initiation of our growth plans.
Operating profit increased by $14.8 million, or 30.1%, to $63.7 million for 2000
from $49.0 million for 1999, and, as a percentage of total revenue increased to
15.7% in 2000 from 14.0% in 1999. This increase is attributable to the improved
profitability in the stores acquired from Central Rents and Thorn Americas.
Net earnings increased by $8.3 million, or 53.2%, to $23.9 million in 2000 from
$15.6 million in 1999.
11
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
Our primary cash requirements are for debt service under our senior credit
facility, the subordinated notes, other indebtedness outstanding, working
capital and capital expenditures. At September 30, 2000, we had in place a
$736.1 million senior credit facility. The amounts outstanding under our senior
credit facility and our subordinated notes as of this date were approximately
$616.1 million and $175.0 million, respectively.
We purchased $345.7 million of rental merchandise during the nine months ended
September 30, 2000.
For the nine months ended September 30, 2000, cash provided by operating
activities increased by $118.1 million, from $24.6 million in 1999 to $142.7
million in 2000. This increase was primarily the result of the increase in net
earnings. Cash used in investing activities increased by $39.8 million from
$24.1 million in 1999 to $63.9 million in 2000. This increase is primarily
attributable to acquisitions of additional stores. Cash used in financing
activities increased by $31.2 million from $19.1 million in 1999 to $50.3
million in 2000, primarily related to increased principal payments on our senior
debt as compared to 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 9.50% per annum at
September 30, 2000, or 1.25% to 2.75% over LIBOR, which was 6.66% at September
30, 2000, at our option. At September 30, 2000, the average rate on outstanding
borrowings was 8.92%. 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 facility, the
subordinated notes, and other indebtedness represent significant liquidity
requirements for us. As of September 30, 2000, we owed approximately $791.1
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 $7.9 million in 2001, 2002, and 2003, and $39.0 million in 2004, plus
applicable interest. Loans under the senior credit facility not covered by
interest rate swap agreements bear interest at floating rates based upon the
interest rate option selected by us.
Capital expenditures are made generally to maintain existing operations and for
new capital assets in new and acquired stores. We spent $24.0 million on capital
expenditures during the nine months ended September 30, 2000, and expect to
spend less than $40.0 million on capital expenditures in the year ended December
31, 2000.
In 2000, we 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 71
stores for $41.6 million in cash in 17 separate transactions during 2000. It is
our intention to acquire or open an additional 30 stores in 2000. 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 months after its initial opening. Total financing
requirements of a typical new store approximates $400,000, 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 cash flows generated from operations, together with amounts
available under our senior credit facility, will be sufficient to fund our debt
service requirements, working capital needs, capital expenditures,
12
<PAGE> 13
litigation costs, and our store expansion intentions during 2000. At September
30, 2000, we had $86.3 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
SFAS No. 133 and its amendments, Accounting for Derivative Instruments and
Hedging Activities, 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. These statements also require that changes in the
derivative's fair value be recognized in earnings unless specific hedge
accounting criteria are met. We will adopt SFAS 133 and its amendments no later
than the first quarter of 2001. These statements are 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 September 30, 2000, we had $175.0 million in subordinated notes
outstanding at a fixed interest rate of 11.0%. As of that date, we also had
$616.1 million in term loans outstanding. 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 September
30, 2000 was $173.3 million, which is $1.7 million below their carrying value.
Unlike the subordinated notes, the $616.1 million in term loans 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 notional 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 $116.1 million, or 14.7% of our total debt, in variable rate debt. A
hypothetical 1.0% change in the LIBOR rate would affect pre-tax earnings by
approximately $300,000 for the three month period ended September 30, 2000.
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% per annum.
13
<PAGE> 14
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. 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. Oral arguments in the appeal occurred in June 2000 and the parties are
awaiting a decision. 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.
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. Some 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.
Wisconsin Attorney General Proceeding. On August 4, 1999, the Wisconsin Attorney
General filed suit against us and our subsidiary ColorTyme in the Circuit Court
of Milwaukee County, Wisconsin, alleging that our rent-to-rent transaction
violates the Wisconsin Consumer Act and the Wisconsin Deceptive Advertising
Statute. The Attorney
14
<PAGE> 15
General claims that our rent-to-rent transaction, coupled with the opportunity
afforded our customers to purchase rental merchandise under what we believe is a
separate transaction, is a disguised credit sale subject to the Wisconsin
Consumer Act. Accordingly, the Attorney General alleges that we have failed to
disclose credit terms, misrepresented the terms of the transaction and engaged
in unconscionable practices. We currently operate 27 stores in Wisconsin.
The Attorney General seeks injunctive relief, restoration of any losses suffered
by any Wisconsin consumer harmed and civil forfeitures and penalties in amounts
ranging from $50 to $10,000 per violation. The Attorney General's claim for
monetary penalties applies to at least 4,500 transactions through September 30,
2000.
Since the filing of this suit, we have attempted to negotiate a mutually
satisfactory resolution of these claims with the Wisconsin Attorney General's
office, including the consideration of possible changes in our business
practices in Wisconsin. To date, we have not been successful, but our efforts
are ongoing. If we are unable to negotiate a settlement with the Attorney
General, we intend to litigate the suits. Discovery is underway, and a pre-trial
conference has been set for April 2001. Although we cannot assure you that we
will be found to have no liability in this matter, we believe its ultimate
resolution will not have a material adverse effect upon us.
Wilfong, et. al. v. Rent-A-Center, Inc. In August 2000, a putative nationwide
class action was filed against us in federal court in East St. Louis, Illinois
by seventeen plaintiffs, alleging that we engaged in class-wide gender
discrimination following our acquisition of Thorn Americas. These allegations
involve charges of wrongful termination, constructive discharge, disparate
treatment and disparate impact. Although the case is in the early stages, we
believe these claims are without merit. We cannot assure you, however, that we
will be found to have no liability.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
CURRENT REPORTS ON FORM 8-K.
None.
EXHIBITS
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
2.1(1) -- 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(2) -- Amended and Restated Certificate of Incorporation of Renters
Choice, Inc.
3.2(3) -- Certificate of Amendment to the Amended and Restated Certificate
of Incorporation of Renters Choice, Inc.
3.3(4) -- Amended and Restated Bylaws of Rent-A-Center, Inc.
4.1(5) -- Form of Certificate evidencing Common Stock
4.2(6) -- Certificate of Designations, Preferences and Relative Rights and
Limitations of Series A Preferred Stock of Renters Choice, Inc.
4.3(7) -- Certificate of Designations, Preferences and Relative Rights and
Limitations of Series B Preferred Stock of Renters Choice, Inc.
4.4(8) -- 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(9) -- Form of Certificate evidencing Series A Preferred Stock
4.6(10) -- Form of Exchange Note
15
<PAGE> 16
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
4.7(11) -- 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(12) -- Amended and Restated Rent-A-Center, Inc. Long-Term Incentive
Plan
10.2(13) -- 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(14) -- 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(15) --Amended and Restated Credit Agreement, dated as of August 5, 1998
as Amended and Restated as of June 29, 2000, among Rent-A-Center,
Inc., Comerica Bank, as Documentation Agent, Bank of America, NA,
as Syndication Agent, and The Chase Manhattan Bank, as
Administration Agent
10.5(16) -- 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
10.7(17) -- 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
10.8(18) __ 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.
10.9(19) -- 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
10.10(20) -- 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
10.11(21) -- Stock Purchase Agreement, dated August 5, 1998, among Renters
Choice, Inc., Apollo Investment Fund IV, L.P. and Apollo Overseas
Partners IV, L.P.
10.13(22) -- Employment Agreement, dated October 1, 1998, by and between
Rent-A-Center, Inc. and Bradley W. Denison
27.1* -- Financial Data Schedule
----------
* Filed herewith.
(1) 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
(2) 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
(3) 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
(4) 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
(5) Incorporated herein by reference to Exhibit 4.1 to the registrant's Form
S-4 filed on January 19, 1999.
16
<PAGE> 17
(6) 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
(7) 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
(8) Incorporated herein by reference to Exhibit 4.4 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(9) Incorporated herein by reference to Exhibit 4.5 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(10) Incorporated herein by reference to Exhibit 4.6 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(11) Incorporated herein by reference to Exhibit 4.7 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(12) Incorporated herein by reference to Exhibit 99.1 to the registrant's
Registration Statement on Form S-8 (File No. 333- 40958)
(13) 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
(14) 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
(15) Incorporated herein by reference to Exhibit 10.4 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2000
(16) 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
(17) 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
(18) 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
(19) 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
(20) 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
(21) 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
(22) 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.
17
<PAGE> 18
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: November 8, 2000
Rent-A-Center, Inc.
18
<PAGE> 19
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
2.1(1) -- 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(2) -- Amended and Restated Certificate of Incorporation of Renters
Choice, Inc.
3.2(3) -- Certificate of Amendment to the Amended and Restated Certificate
of Incorporation of Renters Choice, Inc.
3.3(4) -- Amended and Restated Bylaws of Rent-A-Center, Inc.
4.1(5) -- Form of Certificate evidencing Common Stock
4.2(6) -- Certificate of Designations, Preferences and Relative Rights and
Limitations of Series A Preferred Stock of Renters Choice, Inc.
4.3(7) -- Certificate of Designations, Preferences and Relative Rights and
Limitations of Series B Preferred Stock of Renters Choice, Inc.
4.4(8) -- 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(9) -- Form of Certificate evidencing Series A Preferred Stock
4.6(10) -- Form of Exchange Note
4.7(11) -- 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(12) -- Amended and Restated Rent-A-Center, Inc. Long-Term Incentive
Plan
10.2(13) -- 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(14) -- 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(15) --Amended and Restated Credit Agreement, dated as of August 5, 1998
as Amended and Restated as of June 29, 2000, among Rent-A-Center,
Inc., Comerica Bank, as Documentation Agent, Bank of America, NA,
as Syndication Agent, and The Chase Manhattan Bank, as
Administration Agent
10.5(16) -- 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
10.7(17) -- 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
10.8(18) __ 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.
10.9(19) -- 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
10.10(20) -- 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
10.11(21) -- Stock Purchase Agreement, dated August 5, 1998, among Renters
Choice, Inc., Apollo Investment
</TABLE>
<PAGE> 20
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
Fund IV, L.P. and Apollo Overseas Partners IV, L.P.
10.13(22) -- 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 2.9 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(2) 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
(3) 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
(4) 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
(5) Incorporated herein by reference to Exhibit 4.1 to the registrant's Form
S-4 filed on January 19, 1999.
(6) 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
(7) 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
(8) Incorporated herein by reference to Exhibit 4.4 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(9) Incorporated herein by reference to Exhibit 4.5 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(10) Incorporated herein by reference to Exhibit 4.6 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(11) Incorporated herein by reference to Exhibit 4.7 to the registrant's
Registration Statement Form S-4 filed on January 19, 1999
(12) Incorporated herein by reference to Exhibit 99.1 to the registrant's
Registration Statement on Form S-8 (File No. 333- 40958)
(13) 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
(14) 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
(15) Incorporated herein by reference to Exhibit 10.4 to the registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2000
<PAGE> 21
(16) 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
(17) 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
(18) 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
(19) 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
(20) 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
(21) 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
(22) 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.
