RWY Rent Way

Third Quarter Rental Business Revenues up 5.9%; Same Store Revenues Up 4.1% ERIE, Pa., Aug. 3 /PRNewswire-FirstCall/ -- Rent-Way, Inc. (NYSE:RWY) today reported financial results for the three and nine months ended June 30, 2006. For the third quarter, the Company reported revenues of $135.4 million versus $128.3 million in the same quarter last year. Revenues from the Company's core rental business (which excludes the Company's dPi Teleconnect unit) were $131.5 million versus $124.2 million in the same quarter last year, an increase of 5.9%. Same store rental business revenue increased 4.1% versus last year's quarter. Operating income in the quarter was $12.1 million, compared to $12.3 million in the same period last year. Net income was $2.7 million, compared to a $1.2 million net loss in the third quarter last year. Net income allocable to common shareholders was $2.1 million or $0.08 per diluted share versus a $1.8 million net loss last year or $(0.07) per diluted share. Net income for the quarter gives effect to a non-cash $0.3 million FAS 133 charge related to the conversion feature of the Company's preferred stock. The Company had a $5.0 million FAS 133 charge in last year's quarter. William Short, Rent-Way's President, commented, "Our customers appear to be adapting to higher commodity prices and we continue to see business returning to more normalized levels. Our same-store revenue comparisons were solid in the quarter and within the range we predicted." Mr. Short continued, "During the quarter we opened 1 new store, sold 9 stores, and acquired the rental agreements of another 6 which were merged into existing RentWay locations. This brings our total new store count to 8 this fiscal year." The Company ended the quarter with $45.0 million outstanding on its bank revolver. The Company reported EBITDA for the quarter of $16.1 million versus $16.2 million in the same quarter last year. EBITDA as defined by the Company is operating income plus depreciation of property and equipment and amortization of intangibles. The Company believes EBITDA provides investors useful information regarding its ability to service its debt and generate cash for other purposes, including for capital expenditures and working capital. The Company reported net cash used in operations for the quarter of $6.8 million versus $8.3 million in the same quarter last year. Reconciliations of the non-GAAP measures mentioned above to the nearest comparable GAAP measures are presented in the chart of supplemental information accompanying this release. About Rent-Way Rent-Way is one of the nation's largest operators of rental-purchase stores. Rent-Way rents quality name brand merchandise such as electronics, computers, furniture and appliances from 784 stores in 34 states. Safe-Harbor Statements This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements contain the words "projects," "anticipates," "believes," "expects," "intends," "will," "may" and similar words and expressions. Each such statement is subject to uncertainties, risks and other factors that could cause actual results or performance to differ materially from the results or performance expressed in or implied by such statements. The forward-looking statements in this news release that contain projections of the company's expected financial performance and other projections regarding future performance are inherently subject to change given the nature of projections and the company's actual performance may be better or worse than projected. Uncertainties, risks and other factors that may cause actual results or performance to differ materially from any results or performance expressed or implied by forward- looking statements in this news release include: (1) the company's ability to control its operating expenses and to realize operating efficiencies, (2) the company's ability to develop, implement and maintain adequate and reliable internal accounting systems and controls, (3) the company's ability to retain existing senior management and to attract additional management employees, (4) general economic and business conditions, including demand for the company's products and services, (5) general conditions relating to the rental-purchase industry, including the impact of state and federal laws regulating or otherwise affecting the rental-purchase transaction, (6) competition in the rental-purchase industry, including competition with traditional retailers, (7) the company's ability to make principal and interest payments on its high level of outstanding debt, and (8) the company's ability to open new stores and cause those new stores to operate profitably. A discussion of other risk factors that may cause actual results to differ from the results expressed in or implied by these forward-looking statements can be found in the company's filing with the SEC. The company disclaims any duty to provide updates to the forward-looking statements made in this news release. RENT-WAY, INC. SELECTED BALANCE SHEET DATA (all dollars in thousands) June 30, 2006 September 30, 2005 (unaudited) Cash and cash equivalents $7,145 $6,439 Prepaid expenses 5,967 7,962 Rental merchandise, net 224,929 194,178 Total Assets 494,036 460,485 Accounts payable 22,651 23,744 Debt 247,629 221,313 Total Liabilities 353,335 324,322 Shareholders' Equity 123,668 118,234 RENT-WAY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (all dollars in thousands except per share data) For the three months ended June 30, 2006 2005 (unaudited) (unaudited) Revenues: Rental revenue $113,701 84.0% $108,455 84.5% Prepaid phone service revenue 4,124 3.0% 4,313 3.4% Other revenues 17,543 13.0% 15,529 12.1% Total Revenues 135,368 100.0% 128,297 100.0% Costs and operating expenses: Depreciation and amortization: Rental merchandise 35,881 26.5% 31,949 24.9% Property and equipment 3,783 2.8% 3,732 2.9% Amortization of intangibles 205 0.2% 195 0.2% Cost of prepaid phone service 2,464 1.8% 2,684 2.1% Salaries and wages 36,245 26.8% 35,580 27.7% Advertising, net 4,715 3.5% 5,438 4.2% Occupancy 10,324 7.6% 9,526 7.4% Other operating expenses 29,665 21.9% 26,886 21.0% Total costs and operating expenses 123,282 91.1% 115,990 90.4% Operating income 12,086 8.9% 12,307 9.6% Other income (expense): Interest expense (7,403) -5.5% (7,304) -5.7% Interest income 21 0.0% 9 0.0% Amortization of deferred financing costs (333) -0.2% (289) -0.2% Other income (expense), net (257) -0.2% (4,362) -3.4% Income before income taxes and discontinued operations 4,114 3.0% 361 0.3% Income tax expense 1,351 1.0% 1,395 1.1% Income (loss) before discontinued operations 2,763 2.0% (1,034) -0.8% Loss from discontinued operations (27) 0.0% (181) -0.1% Net income (loss) $2,736 2.0% $(1,215) -0.9% Dividend and accretion of preferred stock (605) -0.4% (549) -0.4% Net income (loss) allocable to common shareholders $2,131 1.6% $(1,764) -1.4% Earnings (loss) per common share: Basic earnings (loss) per common share Income before discontinued operations $0.10 $(0.04) Net income (loss) allocable to common shareholders $0.08 $(0.07) Diluted earnings (loss) per common share Income before discontinued operations $0.10 $(0.04) Net income (loss) allocable to common shareholders $0.08 $(0.07) Weighted average common shares outstanding: Basic 26,398 26,250 Diluted 26,667 26,250 RENT-WAY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (all dollars in thousands except per share data) For the nine months ended June 30, 2006 2005 (unaudited) (unaudited) Revenues: Rental revenue $340,499 83.9% $328,596 84.1% Prepaid phone service revenue 12,289 3.0% 13,617 3.5% Other revenues 52,821 13.0% 48,579 12.4% Total Revenues 405,609 100.0% 390,792 100.0% Costs and operating expenses: Depreciation and amortization: Rental merchandise 108,474 26.7% 100,471 25.7% Property and equipment 11,009 2.7% 12,145 3.1% Amortization of intangibles 586 0.1% 251 0.1% Cost of prepaid phone service 7,733 1.9% 8,460 2.2% Salaries and wages 109,831 27.1% 105,164 26.9% Advertising, net 15,824 3.9% 15,524 4.0% Occupancy 30,454 7.5% 27,874 7.1% Other operating expenses 91,039 22.4% 83,133 21.3% Total costs and operating expenses 374,950 92.4% 353,022 90.3% Operating income 30,659 7.6% 37,770 9.7% Other income (expense): Interest expense (21,711) -5.4% (21,662) -5.5% Interest income 64 0.0% 22 0.0% Amortization of deferred financing costs (982) -0.2% (854) -0.2% Other income (expense), net 2,012 0.5% (4,601) -1.2% Income before income taxes and discontinued operations 10,042 2.5% 10,675 2.7% Income tax expense 4,436 1.1% 4,185 1.1% Income (loss) before discontinued operations 5,606 1.4% 6,490 1.7% Loss from discontinued operations (120) 0.0% (361) -0.1% Net income (loss) $5,486 1.4% $6,129 1.6% Dividend and accretion of preferred stock (1,769) -0.4% (1,619) -0.4% Net income (loss) allocable to common shareholders $3,717 0.9% $4,510 1.2% Earnings (loss) per common share: Basic earnings (loss) per common share Income before discontinued operations $0.21 $0.24 Net income (loss) allocable to common shareholders $0.14 $0.17 Diluted earnings (loss) per common share Income before discontinued operations $0.14 $0.24 Net income (loss) allocable to common shareholders $0.13 $0.17 Weighted average common shares outstanding: Basic 26,388 26,246 Diluted 29,856 26,778 Calculation of EBITDA and Reconciliation of Net Cash Used in Operations to EBITDA For the Three and Nine Months Ended June 30, 2006 and 2005 (all dollars in thousands) Three Months Ended Nine Months Ended 06/30/06 06/30/05 06/30/06 06/30/05 (unaudited) (unaudited) (unaudited) (unaudited) Calculation of EBITDA Operating income $12,086 $12,307 $30,659 $37,770 Depreciation - property and equipment 3,783 3,732 11,009 12,145 Amortization of intangibles 205 195 586 251 EBITDA $16,074 $16,234 $42,254 $50,166 Reconciliation of Net Cash Used in Operations to EBITDA Three Months Ended Nine Months Ended 06/30/06 06/30/05 06/30/06 06/30/05 (unaudited) (unaudited) (unaudited) (unaudited) Net cash used in operating activities $(6,826) $(8,281) $(10,626) $(12,992) Net cash used in discontinued operations 27 181 120 361 Adjustments to reconcile net income (loss) to net cash used in operating activities (42,618) (41,610) (125,379) (122,047) Changes in assets and liabilities 52,153 48,495 141,371 140,807 Depreciation - property and equipment 3,783 3,732 11,009 12,145 Amortization of intangibles 205 195 586 251 Interest expense 7,403 7,304 21,711 21,662 Interest income (21) (9) (64) (22) Amortization of deferred financing costs 333 289 982 854 Other income 257 4,362 (2,012) 4,601 Income taxes 1,351 1,395 4,436 4,185 Loss from discontinued operations 27 181 120 361 EBITDA $16,074 $16,234 $42,254 $50,166 DATASOURCE: Rent-Way, Inc. CONTACT: John Lombardi of Rent-Way, +1-814-455-5378 Web site: http://www.rentway.com/

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