Although the quarter did not meet our expectations, we are already seeing a return to more historical business performance in the first quarter of fiscal 2006.
William Short, President, Rent-Way

Rent-Way Inc. (RWY) reported consolidated revenues of $125.1 million for its fourth quarter and fiscal year ended September 30, 2005, up from $121.3 million in the same quarter last year.

Revenues from the company's core rental business were $121.5 million, up 4.6% from $116.2 million in the same quarter last year. For the quarter, same store revenues increased 1.4%. Consolidated operating income was $3.0 million, down from $5.5 million in the same period last year. Consolidated net income was $4.3 million versus consolidated net income of $3.9 million in last year's quarter. Net income allocable to common stockholders was $3.8 million compared with $3.3 million in the 2004 fourth quarter. Net income was positively impacted by a $9.0 million adjustment in the 2005 quarter and a $7.2 million adjustment in the 2004 quarter related to the conversion feature of the company's preferred stock. This positive adjustment is reversed in the calculation of net income per diluted share, resulting in a net loss per diluted share of $(0.16) in the 2005 quarter and $(0.11) in last year's quarter.

For the fiscal 2005 full year, Rent-Way reported consolidated revenues of $515.9 million, up from $504.7 million in the prior year. Revenues from the company's core rental business were $499.2 million, up 3.9% from $480.5 million last year. For the full fiscal year, same store revenues increased 2.1%. Consolidated operating income was $40.7 million, compared to $41.1 million in the prior year. Consolidated net income for the year was $10.5 million, up from $9.1 million last year. Net income allocable to common stockholders for fiscal 2005 was $8.3 million, or $0.27 per diluted share, versus $7.3 million, or $0.25 per diluted share in fiscal 2004.

"Our fourth quarter results reflect both the difficult business conditions retailers faced, with customers suffering through record high gas prices, and the impact of Hurricanes Katrina and Rita," stated William Short, Rent-Way's President. "Despite the quarter's challenges and the drag of our new store investments, the fiscal year was solidly profitable, with full year operating income at the high end of our forecasted range. If you back out new stores, the effects of the hurricanes and a $2.2 million one-time write-off we took in the fourth quarter related to a change in our jewelry vendor, full year operating income would have been $52.1 million, or a 10.1% operating margin," continued Mr. Short. "Although the quarter did not meet our expectations, we are already seeing a return to more historical business performance in the first quarter of fiscal 2006. Customer traffic is on the increase, and through November, our potential weekly rental revenue growth is outpacing that of the first quarter last year. We are encouraged by this rebound, and intend to continue to pursue growth and greater profitability in fiscal 2006," concluded Mr. Short.

William McDonnell, Rent-Way's Senior Vice President and CFO commented, "We achieved over 99% of the bottom range of our full year rental revenue forecast and hit the high end of our full year operating income forecast. Largely due to the difficult industry conditions and other factors discussed above, we missed our fourth quarter forecasts. We opened 44 new stores in fiscal 2005 and intend to continue to open new stores in fiscal 2006. We are also actively looking for well priced store acquisition opportunities that can be folded into our existing portfolio," concluded Mr. McDonnell.

The company expects that 2006 full year rental revenues will increase by 3-4% over 2005 and that same store revenues will be flat to slightly positive. The company expects to provide guidance on fiscal 2006 full year revenues and operating income in mid-January.