Our same store sales increased 1.1% for the quarter, which is primarily related to changes in our promotional activities as well as an increase in the number of units on rent. In addition, we believe our customer has adjusted to the current level of fuel costs.
Mark E. Speese, Chairman and CEO, Rent-A-Center

Rent-A-Center (RCII) announced total revenues for the quarter ended June 30, 2006 of $583.6 million, a $3.0 million increase from $580.6 million for the same period in the prior year. This increase of 0.5% in revenues was primarily driven by a 1.1% increase in same store sales plus an increase in incremental revenues generated in new and acquired stores, offset by the revenue lost from stores that were closed or sold during the previous twelve months.

Reported net earnings for the quarter ended June 30, 2006 were $39.8 million, or $0.56 per diluted share, representing an increase of 7.7% from the $0.52 per diluted share, or net earnings of $39.6 million for the same period in the prior year, when excluding the benefit of the 2005 tax audit reserve credit discussed below. The increase in reported net earnings per diluted share is primarily attributable to the increase in same store sales, as well as the reduction in the number of Rent-A-Center's outstanding shares, offset by increases in normal operating costs, such as utility and fuel costs, and expenses related to stock options. When including the 2005 tax audit reserve credit discussed below, reported net earnings per diluted share for the quarter increased 1.8% from the $0.55 per diluted share, or reported net earnings of $41.7 million for the same period in the prior year.

Reported net earnings per diluted share also increased as a result of a $2.0 million insurance reserve credit resulting from the use of certain company specific loss development factors developed by independent actuaries, rather than the general industry loss development factors previously used by Rent-A-Center. The $2.0 million insurance reserve credit had an approximate $0.02 per diluted share benefit in the quarter ended June 30, 2006.

"Our second quarter same store sales continued a positive trend in 2006," commented Mark E. Speese, Rent-A-Center's Chairman and Chief Executive Officer. "Our same store sales increased 1.1% for the quarter, which is primarily related to changes in our promotional activities as well as an increase in the number of units on rent," Speese continued. "In addition, we believe our customer has adjusted to the current level of fuel costs. As a result of these factors, we are raising our fiscal 2006 guidance to $2.08 to $2.15 diluted earnings per share from $2.00 to $2.10," Speese stated.

Operations Highlights

During the second quarter of 2006, Rent-A-Center opened 9 new rent-to-own store locations, acquired 16 stores as well as accounts from 15 additional locations, consolidated 19 stores into existing locations, and sold 12 stores, for a net reduction of six stores and an ending balance of 2,749 stores. During the second quarter of 2006, the Company added financial services to 21 existing rent-to-own store locations and ended the quarter with a total of 77 stores providing these services.

Through the six month period ending June 30, 2006, Rent-A-Center opened 19 new rent-to-own store locations, acquired 18 stores as well as accounts from 20 additional locations, consolidated 33 stores into existing locations, and sold 15 stores, for a net reduction of 11 stores. Through the six month period ending June 30, 2006, the Company added financial services to 38 existing rent-to-own store locations and consolidated one store with financial services into an existing location, for a net addition of 37 stores providing these services.

Since June 30, 2006, Rent-A-Center has opened 1 new rent-to-own store location and acquired 1 store, as well as accounts from 4 additional locations. The Company has added financial services to 4 existing rent-to-own store locations since June 30, 2006.

2005 Reserve Adjustment Credits

2005 Tax Audit Reserve Credit. During the second quarter of 2005, Rent-A-Center recorded a $2.0 million tax audit reserve credit associated with the examination and favorable resolution of the Company's 1998 and 1999 federal tax returns. The tax audit reserve credit increased diluted earnings per share in the second quarter of 2005 by $0.03, from $0.52 per diluted earnings per share to the reported diluted earnings per share of $0.55.

2005 Litigation Reversion Credit. In addition, Rent-A-Center recorded an $8.0 million pre-tax credit in the first quarter of 2005 associated with the settlement of the Griego/Carrillo litigation. This pre-tax litigation reversion credit increased diluted earnings per share for the six month period ended June 30, 2005 by $0.07. The litigation reversion credit, combined with the tax audit reserve credit in the second quarter of 2005, increased diluted earnings per share for the six month period ended June 30, 2005 by $0.10 to the reported diluted earnings per share of $1.18.

Rent-A-Center will host a conference call to discuss the first quarter results on Tuesday morning, July 25, 2006, at 10:45 a.m. EST.Audio of the call will be broadcast live. A link to the live webcast will be available from My RTO Portfolio.

Rent-A-Center, Inc., headquartered in Plano, Texas, currently operates 2,751 company-owned stores nationwide and in Canada and Puerto Rico.

THIRD QUARTER 2006 GUIDANCE:

Revenues

-- Rent-A-Center expects total revenues to be in the range of $584 million to $592 million.

-- Store rental and fee revenues are expected to be between $528 million and $534 million.

-- Total store revenues are expected to be in the range of $575 million to $583 million.

-- Same store sales are expected to be in the 2.5% to 3.5% range.

-- Rent-A-Center expects to open 5-15 new rent-to-own store locations.

-- The Company expects to add financial services to 20-30 rent-to-own store locations.

Expenses

-- Rent-A-Center expects cost of rental and fees to be between 21.7% and 22.1% of store rental and fee revenue and cost of merchandise sold to be between 73% and 78% of store merchandise sales.

-- Store salaries and other expenses are expected to be in the range of 58.5% to 60.0% of total store revenue.

-- General and administrative expenses are expected to be between 3.6% and 3.8% of total revenue.

-- Net interest expense is expected to be approximately $12.0 million, depreciation of property assets to be approximately $13.5 million and amortization of intangibles is expected to be approximately $1.1 million.

-- The effective tax rate is expected to be approximately 37.0% of pre-tax income.

-- Diluted earnings per share are estimated to be in the range of $0.46 to $0.50.

-- Diluted shares outstanding are estimated to be between 70.5 million and 71.5 million.

FISCAL 2006 GUIDANCE:

Revenues

-- Rent-A-Center expects total revenues to be in the range of $2.360 billion and $2.380 billion.

-- Store rental and fee revenues are expected to be between $2.100 billion and $2.118 billion.

-- Total store revenues are expected to be in the range of $2.318 billion and $2.338 billion.

-- Same store sales are expected to be in the 1.0% to 2.0% range.

-- Rent-A-Center expects to open 60-70 new store locations.

-- Rent-A-Center expects to add financial services to 100-120 rent-to-own store locations.

Expenses

-- Rent-A-Center expects cost of rental and fees to be between 21.6% and 22.0% of store rental and fee revenue and cost of merchandise sold to be between 70% and 75% of store merchandise sales.

-- Store salaries and other expenses are expected to be in the range of 57.5% to 59.0% of total store revenue.

-- General and administrative expenses are expected to be between 3.6% and 3.8% of total revenue.

-- Net interest expense is expected to be between $43.0 million and $48.0 million, depreciation of property assets is expected to be between $52.0 million and $57.0 million and amortization of intangibles is expected to be approximately $4.0 million.

-- The effective tax rate is expected to be approximately 37.0% of pre-tax income.

-- Diluted earnings per share are estimated to be in the range of $2.08 to $2.15.

-- Diluted shares outstanding are estimated to be between 70.0 million and 71.5 million.