The improvements have come from a 16% increase in deliveries which has resulted in a 26% customer growth increase experienced in the third quarter compared to the same period in 2004
David Ingram, President and CEO

easyhome (EH.TO), Canada's largest rent to own company, today announced its results for the third quarter ending September 30, 2005.

Revenue for the third quarter increased to $25.7 million, an increase of $3.6 million, or 16.4%, from $22.1 million a year ago. Same store revenue growth (revenue from stores open for the entirety of the comparable periods) was 8.8% for the quarter, building on the 8.7% increase in the comparable period last year. An increased customer base accounted for all of the growth in the rental agreement portfolio.

During the quarter, the Company reversed $500,000 of the class action settlement provision that was recorded in the second quarter of 2005. Because of the declining rate of redemption of the credit vouchers, management is of the view that the remaining provision of $511,000 will be adequate to cover any costs and credit voucher redemptions to December 31, 2005 when the vouchers expire.

Including the $500,000 class action provision recovery in 2005 and the $2.3 million future tax asset valuation reserve reversal in 2004, operating income was $3.8 million in 2005 compared with operating income of $2.9 million during the same quarter last year. Net income decreased $1.8 million, from $4.1 million in 2004 to $2.3 million in 2005 and diluted earnings per share decreased from $0.41 to $0.23.

Revenue for the nine months ended September 30, 2005 was $75.5 million compared with $64.6 million for the same period last year, an increase of $10.9 million, or 16.9%. Same store revenue growth (revenue from stores open for the entirety of the comparable periods) for the nine months was 8.5% compared with 9.3% last year. The growth in revenue is entirely attributable to an increase in the Company's customer base.

Excluding the class action provision, operating income for the nine months ended September 30, 2005 was $9.5 million, an increase of $1.9 million over last year, or 24.5%. Net income would have been $5.9 million, an increase of $1.1 million over last year, or 23.3%. Diluted earnings per share would have been $0.57 compared with $0.47 last year. Net income and diluted earnings per share for the nine months ended September 30, 2004 exclude the effect of the future tax asset valuation reserve reversal of $2.3 million.

Including the $3.1 million class action provision in 2005 and the $2.3 million future tax asset valuation reserve reversal in 2004, operating income for the nine months ended September 30, 2005 decreased to $6.4 million from $7.6 million a year ago. Net income was $3.9 million compared with $7 million last year and diluted earnings per share were $0.38 compared with $0.70 in the 2004 comparable period.

Commenting on the results, David Ingram, President and CEO said, "easyhome has continued to focus its efforts on carefully planned and controlled growth. For the 48th consecutive month, our revenue has shown comparable increases and at a pace which is consistent with the last 4 years. The improvements have come from a 16% increase in deliveries which has resulted in a 26% customer growth increase experienced in the third quarter compared to the same period in 2004. At the end of September, units on rent were 22% higher and our potential monthly rental revenue had increased $1 million or 16% from 1 year ago."

In the third quarter, easyhome continued to execute its new store expansion program, opening 6 new stores and preparing to open 3 more at the beginning of October. A total of 19 stores have opened in 2005 and the Company expects to complete the year with a total of 24 new stores. In addition to this, 4 new Leon's kiosk locations are expected to open in November bringing the total store count at year-end to 166 stores and 5 kiosks.

"We have now opened 32 new stores since November 2003 of which 22 have been open 6 months or longer. They continue to perform above plan with the average location achieving profit in months 6-7," said Mr. Ingram

"From a financial perspective, the third quarter had modest earnings growth and was affected by 3 specific areas of our operation. Firstly, we had a higher drag from new stores due to more openings that created losses of $435,000 compared with $75,000 in the third quarter of 2004. Secondly, the impact of fuel price increases placed a burden of $100,000 on distribution expense. Lastly, our rental asset amortization run rate increased by 1.3%, mainly due to a weaker performance with collections during the summer months, which resulted in an impact of approximately $300,000. Combined, these expenses were equivalent to $0.05 in EPS."

Concluding, Mr. Ingram stated, "We remain optimistic for the fourth quarter and see continued demand from customers for our rental proposition. Our collections performance has returned to normal run rates, and our merchandise and marketing team have built an exciting schedule for the Holiday Season."

Donald K. Johnson, Chairman of the Board, commented, "We continue to be pleased with the Company's progress especially in relation to the expansion of the store base with 22 net new store openings in the last twelve months entirely funded out of internal cash flow."

Today, the Board of Directors approved a dividend payment of $0.04 per share payable on January 4, 2006 to the holders of common shares of record on the close of business on November 30, 2005.

easyhome Ltd., operated 161 stores in Canada.