07-12-02
RTO Online

Factoids

Rent Way founded by William Morgenstern in 1981

Latest 10Q, May 14 2002

William Morgenstern, CEO Began his rent to own career in 1979 as a Rent-A-Center store manager in Ft. Worth, Texas.

William A. McDonnell, VP, CFO Prior to coming to Rent Way, McDonnell was a director in the Global Distribution Group for the Bank of Montreal.

Ron DeMoss, VP and General Counsel Began rent to own career in 1990 as a corporate counsel for Rent-A-Center. Involved in the enactment of rental-purchase legislation in 11 states. Chairman of APRO's Government Relations Committee spearheading HR1701

John A. Lombardi VP, Corporate Controller and Chief Accounting Officer Former EVP & CFO of Northstar Health Services and specialty consulting services of Arthur Andersen LLP

U.S. District Court Judge Sean P. McLaughlin ruled Thursday to dismiss Rent Way's request to have the civil case, accusing Rent Ways top officers of accounting fraud, thrown out. In the 42 page ruling, Judge McLaughlin stated that the allegations are strong enough to deny Rent Way's  request to dismiss the case.

William Morgenstern
CEO, Rent Way
"While I am disappointed in the court's
ruling, I recognize that in reviewing a
motion to dismiss, the court is required to accept all allegations in the complaint.
I have no doubt that the truth will ultimately prevail - specifically, that as soon as I learned about the accounting problems at RentWay, I publicly disclosed them and
went to work to correct them.  Meanwhile, we will continue our work at RentWay to return it to profitability and to move the company forward"

Cramer Rosenthal McGlynn, a financial services firm and lead plaintiff in the civil suit, touts this dismissal as a major development. In reality, motions to dismiss are always filed, and routinely denied, in nearly every civil suit in every court in the nation. These denials are not an indicator of future developments. They are simply a finding by the Judge that the case should move on to the next step. Some insiders believe that, in a pre-Enron universe, this case may not have seen the inside of a courtroom.

Cramer Rosenthal McGlynn, claims it purchased more than 433,000 shares of Rent-Way stock in the months preceding Rent Way's announcement of 'accounting irregularities'. The firms final buy came just two weeks before the announcement that sent RWY stock plummeting from $23.44 to $5 per share overnight. The stock bottomed out at $2.31 in December 2000.

After a massive cost cutting campaign and a complete business model makeover, CEO William Morgenstern and the Rent Way team began the recovery process. Their efforts are paying off. The company has reported improved results in recent quarters and is gaining favor with investors. RWY is currently trading at $10.05, up 63% since January.

Rent Way stock dropped only 4% on the news of the court case moving forward, signaling that the decision was no surprise to most investors, and that potential 'bad news' is already factored in the stock price.

In the meantime, Thousands of Rent Way employees in 42 States keep on renting, collecting, and growing...gloriously unaffected by the controversy.