þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) | |
OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
For the fiscal year ended December 31, 2005 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) | |
OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 45-0491516 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization)
|
Identification No.) |
Aggregate market value of the 72,471,232 shares of Common Stock held by non-affiliates of the registrant at the closing sales price as reported on the National Association of Securities Dealers Automated Quotation System National Market System on June 30, 2005 | $1,687,854,993 | |
Number of shares of Common Stock outstanding as of the close of business on March 8, 2006: | 69,243,331 |
i
Item 1. | Business. |
1
| enhancing the operations, revenue and profitability in our store locations; | |
| opening new and acquiring existing rent-to -own stores; | |
| expanding our financial services business within our existing store locations; and | |
| building our national brand. |
Enhancing Store Operations |
| use consumer focused advertising, including direct mail, television, radio and print media, while also utilizing new business relationships and strategic alliances to increase store traffic and expand our customer base; | |
| expand the offering of product lines to appeal to more customers to increase the number of product rentals and grow our customer base; | |
| expand our financial services business within our existing store locations; | |
| evaluate other growth strategies, including the entry into additional lines of business offering products and services designed to appeal to our customer demographic; | |
| employ strict store-level cost control; | |
| analyze and evaluate store operations against key performance indicators; and | |
| use a revenue and profit based incentive pay plan. |
Opening New and Acquiring Existing Rent-To-Own Stores |
2
(1) | Substantially all of the merged, sold or closed stores in 2005 relate to our store consolidation plan discussed in more detail on p. 30. |
(2) | The total purchase price includes non-cash consideration of approximately $23.8 million in common stock issued and approximately $6.1 million in fair value assigned to the stock options assumed in connection with the acquisition of Rent Rite, Inc. |
3
Expanding Our Financial Services Business |
Building Our National Brand |
4
Number of Stores
Number of Stores
Company
With Financial
Company
With Financial
Location
Owned
Services
Franchised
Location
Owned
Services
Franchised
60
5
Nebraska
9
6
1
Nevada
22
3
4
56
7
New Hampshire
14
2
35
1
New Jersey
43
4
150
5
New Mexico
17
10
39
1
New York
128
13
37
3
North Carolina
111
11
18
North Dakota
2
District of Columbia
4
Ohio
175
6
173
19
Oklahoma
42
14
106
14
Oregon
31
5
3
12
4
Pennsylvania
126
3
11
7
2
Puerto Rico
30
110
8
Rhode Island
17
1
102
7
South Carolina
43
7
24
South Dakota
5
31
17
Tennessee
94
1
44
1
Texas
261
59
29
6
Utah
15
4
25
9
Vermont
7
63
9
Virginia
54
10
60
2
Washington
46
16
2
107
17
West Virginia
22
4
Wisconsin
21
*
28
2
Wyoming
5
70
6
Alberta, Canada
7
9
5
TOTAL
2,760
40
296
* | Represents stores operated by Get It Now, LLC, one of our subsidiaries. |
| Represents stores operated by Rent-A-Centre, Ltd., one of our subsidiaries. |
Product Selection |
5
Rental Purchase Agreements |
Product Turnover |
Customer Service |
6
Collections |
7
8
9
10
Rental Purchase Transactions |
State Regulation |
11
Federal Legislation |
Financial Services |
12
13
14
15
| quarterly variations in our results of operations, which may be impacted by, among other things, changes in same store sales, when and how many rent-to -own stores we acquire or open, and the rate at which we add financial services to our existing rent-to -own stores; | |
| quarterly variations in our competitors results of operations; | |
| changes in earnings estimates or buy/sell recommendations by financial analysts; | |
| the stock price performance of comparable companies; and | |
| general market conditions or market conditions specific to particular industries. |
16
Item 1B. | Unresolved Staff Comments. |
Item 2. | Properties. |
Item 3. | Legal Proceedings. |
17
18
State Wage and Hour Class Actions |
19
20
Item 4. | Submission of Matters to a Vote of Security Holders. |
21
Item 5. | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
2005 | High | Low | ||||||
Fourth Quarter
|
$ | 20.360 | $ | 14.900 | ||||
Third Quarter
|
24.360 | 17.910 | ||||||
Second Quarter
|
27.750 | 22.360 | ||||||
First Quarter
|
27.890 | 24.080 |
2004 | High | Low | ||||||
Fourth Quarter
|
$ | 26.890 | $ | 22.000 | ||||
Third Quarter
|
31.600 | 24.700 | ||||||
Second Quarter
|
33.930 | 27.630 | ||||||
First Quarter
|
33.342 | 27.030 |
Maximum Dollar | ||||||||||||||||
Value of Shares | ||||||||||||||||
Total Number of | that May Yet Be | |||||||||||||||
Shares Purchased as | Purchased Under | |||||||||||||||
Total Number | Average Price | Part of Publicly | the Plans or | |||||||||||||
of Shares | Paid per Share | Announced Plans or | Programs | |||||||||||||
Period | Purchased | (including fees) | Programs | (including fees) | ||||||||||||
October 1 through October 31
|
0 | $ | 0.0000 | 0 | $ | 78,358,403 | ||||||||||
November 1 through November 30
|
1,816,100 | $ | 18.9807 | 1,816,100 | $ | 43,887,581 | ||||||||||
December 1 through December 31
|
0 | $ | 0.0000 | 0 | $ | 43,887,581 | ||||||||||
Total
|
1,816,100 | $ | 18.9807 | 1,816,100 | $ | 43,887,581 | ||||||||||
22
Item 6. | Selected Financial Data. |
Year Ended December 31, | ||||||||||||||||||||||
2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||
Consolidated Statements of Earnings
|
||||||||||||||||||||||
Revenues
|
||||||||||||||||||||||
Store
|
||||||||||||||||||||||
Rentals and fees
|
$ | 2,084,757 | $ | 2,071,866 | $ | 1,998,952 | $ | 1,828,534 | $ | 1,650,851 | ||||||||||||
Merchandise sales
|
177,292 | 166,594 | 152,984 | 115,478 | 94,733 | |||||||||||||||||
Installment sales
|
26,139 | 24,304 | 22,203 | 6,137 | | |||||||||||||||||
Other
|
7,903 | 3,568 | 3,083 | 2,589 | 3,476 | |||||||||||||||||
Franchise
|
||||||||||||||||||||||
Merchandise sales
|
37,794 | 41,398 | 45,057 | 51,514 | 53,584 | |||||||||||||||||
Royalty income and fees
|
5,222 | 5,525 | 5,871 | 5,792 | 5,884 | |||||||||||||||||
Total revenue
|
2,339,107 | 2,313,255 | 2,228,150 | 2,010,044 | 1,808,528 | |||||||||||||||||
Operating expenses
|
||||||||||||||||||||||
Direct store expenses
|
||||||||||||||||||||||
Cost of rentals and fees
|
452,583 | 450,035 | 432,696 | 383,400 | 343,197 | |||||||||||||||||
Cost of merchandise sold
|
129,624 | 119,098 | 112,283 | 84,628 | 72,539 | |||||||||||||||||
Cost of installment sales
|
10,889 | 10,512 | 10,639 | 3,776 | | |||||||||||||||||
Salaries and other expenses
|
1,358,760 | (1) | 1,277,926 | 1,180,115 | 1,070,265 | 1,019,402 | ||||||||||||||||
Franchise cost of merchandise sold
|
36,319 | 39,472 | 43,248 | 49,185 | 51,251 | |||||||||||||||||
1,988,175 | 1,897,043 | 1,778,981 | 1,591,254 | 1,486,389 | ||||||||||||||||||
General and administrative expenses
|
82,290 | 75,481 | 66,635 | 63,296 | 55,359 | |||||||||||||||||
Amortization of intangibles
|
11,705 | (2) | 10,780 | 12,512 | 5,045 | 30,194 | ||||||||||||||||
Class action litigation settlement (reversion)
|
(8,000 | ) (3) | 47,000 | (6) | | | 52,000 | (8) | ||||||||||||||
Restructuring charge
|
15,166 | (4) | | | | | ||||||||||||||||
Total operating expenses
|
2,089,336 | 2,030,304 | 1,858,128 | 1,659,595 | 1,623,942 | |||||||||||||||||
Operating profit
|
249,771 | 282,951 | 370,022 | 350,449 | 184,586 | |||||||||||||||||
Income from sale of charged off accounts
|
| (7,924 | ) (7) | | | | ||||||||||||||||
Finance charges from refinancing
|
| 4,173 | 35,260 | | | |||||||||||||||||
Interest expense, net
|
40,703 | 35,323 | 43,932 | 62,006 | 59,780 | |||||||||||||||||
Earnings before income taxes
|
209,068 | 251,379 | 290,830 | 288,443 | 124,806 | |||||||||||||||||
Income tax expense
|
73,330 | (5) | 95,524 | 109,334 | 116,270 | 58,589 | ||||||||||||||||
23
Item 6.
Selected Financial Data Continued
Year Ended December 31,
2005
2004
2003
2002
2001
(In thousands, except per share data)
135,738
155,855
181,496
172,173
66,217
10,212
15,408
$
135,738
$
155,855
$
181,496
$
161,961
$
50,809
$
1.86
$
1.99
$
2.16
$
2.20
$
0.79
$
1.83
$
1.94
$
2.08
$
1.89
$
0.71
$
750,680
$
759,111
$
680,700
$
631,724
$
653,701
929,326
922,404
797,434
743,852
711,096
1,948,664
1,967,788
1,831,302
1,626,652
1,630,315
724,050
708,250
698,000
521,330
702,506
1,125,232
1,173,517
1,036,472
784,252
1,224,937
823,432
794,271
794,830
842,400
405,378
2,760
2,875
2,648
2,407
2,281
(2.3
)%
(3.6
)%
3.0
%
6.0
%
8.0
%
2,844
2,788
2,560
2,325
2,235
296
313
329
318
342
(1) | Includes the effects of $5.2 million in charges recorded in the third and fourth quarters of 2005 as a result of Hurricanes Katrina, Rita and Wilma. These charges were primarily related to the disposal of inventory and fixed assets. |
(2) | Includes the effects of $3.7 million in goodwill impairment charges recorded in the third quarter of 2005 as result of Hurricane Katrina. |
(3) | Includes the effect of a pre-tax legal reversion of $8.0 million recorded in the first quarter of 2005 associated with the settlement of a class action lawsuit in the state of California. |
(4) | Includes the effects of a $15.2 million pre-tax restructuring expense as part of the store consolidation plan announced September 6, 2005. |
(5) | Includes the effects of a $2.0 million tax audit reserve credit associated with the examination and favorable resolution of our 1998 and 1999 federal tax returns and a $3.3 million state tax reserve credit due to a change in estimate related to potential loss exposures. |
(6) | Includes the effects of a pre-tax legal settlement charge of $47.0 million recorded in the third quarter of 2004 associated with the settlement of a class action lawsuit in the state of California. |
(7) | Includes the effects of $7.9 million in pre-tax income associated with the 2004 sale of previously charged off accounts. |
(8) | Includes the effects of a pre-tax legal settlement charge of $52.0 million associated with the 2001 settlement of class action lawsuits in the states of Missouri, Illinois, and Tennessee. |
(9) | In accordance with the adoption of SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity , total liabilities also includes redeemable convertible voting preferred stock. |
(10) | Comparable store revenue for each period presented includes revenues only of stores open throughout the full period and the comparable prior period. |
24
Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations. |
25
| uncertainties regarding our ability to open new rent-to -own stores; | |
| our ability to acquire additional rent-to -own stores on favorable terms; | |
| our ability to enhance the performance of these acquired stores; | |
| our ability to control store level costs; | |
| our ability to identify and successfully market products and services that appeal to our customer demographic; | |
| our ability to identify and successfully enter into new lines of business offering products and services that appeal to our customer demographic, including our financial services products; | |
| the results of our litigation; | |
| the passage of legislation adversely affecting the rent-to -own or financial services industries; | |
| interest rates; | |
| our ability to enter into new and collect on our rental purchase agreements; | |
| our ability to enter into new and collect on our short term loans; | |
| economic pressures affecting the disposable income available to our targeted consumers, such as high fuel and utility costs; | |
| changes in our effective tax rate; | |
| our ability to maintain an effective system of internal controls; | |
| changes in the number of share-based compensation grants, methods used to value future share-based payments and changes in estimated forfeiture rates with respect to share-based compensation; | |
| changes in our stock price and the number of shares of common stock that we may or may not repurchase; and | |
| the other risks detailed from time to time in our SEC reports. |
26
27
28
Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||||
2005 | 2004 | 2003 | 2005 | 2004 | 2003 | ||||||||||||||||||||
(Company-owned stores only) | (Franchise operations only) | ||||||||||||||||||||||||
Revenues
|
|||||||||||||||||||||||||
Rentals and fees
|
90.8 | % | 91.4 | % | 91.8 | % | | % | | % | | % | |||||||||||||
Merchandise Sales
|
8.9 | 8.4 | 8.0 | 87.9 | 88.2 | 88.5 | |||||||||||||||||||
Other/ Royalty income and fees
|
0.3 | 0.2 | 0.2 | 12.1 | 11.8 | 11.5 | |||||||||||||||||||
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||
Operating Expenses
|
|||||||||||||||||||||||||
Direct store expenses
|
|||||||||||||||||||||||||
Cost of rentals and fees
|
19.7 | % | 19.9 | % | 19.9 | % | | % | | % | | % | |||||||||||||
Cost of merchandise sold
|
6.1 | 5.7 | 5.6 | 84.4 | 84.1 | 84.9 | |||||||||||||||||||
Salaries and other expenses
|
59.2 | 56.4 | 54.2 | | | | |||||||||||||||||||
85.0 | 82.0 | 79.7 | 84.4 | 84.1 | 84.9 | ||||||||||||||||||||
General and administrative expenses
|
3.5 | 3.2 | 3.1 | 6.6 | 6.3 | 4.1 | |||||||||||||||||||
Amortization of intangibles
|
0.5 | 0.5 | 0.1 | 0.7 | 0.6 | 0.6 | |||||||||||||||||||
Class action litigation (reversion)
|
(0.3 | ) | | | | | | ||||||||||||||||||
Restructuring charge
|
0.7 | 2.1 | | | | | |||||||||||||||||||
Total operating expenses
|
89.4 | 87.8 | 82.9 | 91.7 | 91.0 | 89.6 | |||||||||||||||||||
Operating profit
|
10.6 | 12.2 | 17.1 | 8.3 | 9.0 | 10.4 | |||||||||||||||||||
Interest, net and other income
|
1.8 | 1.4 | 3.7 | (1.0 | ) | (0.9 | ) | (1.1 | ) | ||||||||||||||||
Earnings before income taxes
|
8.8 | % | 10.8 | % | 13.4 | % | 9.3 | % | 9.9 | % | 11.5 | % | |||||||||||||
Overview of 2005 Results |
29
Estimated | |||||||||||||
Expense Recognized | Remaining Charges | ||||||||||||
Closing Plan Estimate | During 2005 | for 2006 | |||||||||||
(In thousands) | |||||||||||||
Lease obligations
|
$ | 8,661 - $13,047 | $ | 9,261 | $ | 0 - $3,786 | |||||||
Fixed asset disposals
|
2,630 - 4,211 | 3,333 | 0 - 878 | ||||||||||
Net proceeds from stores sold
|
| (2,250 | ) | | |||||||||
Other
costs
(1)
|
830 - 7,875 | 4,822 | 0 - 3,053 | ||||||||||
Total
|
$ | 12,121 - $25,133 | $ | 15,166 | $ | 0 - $7,717 | |||||||
Cash | |||||||||||||||||
(Payments) | |||||||||||||||||
September 30, 2005 | Charges to | Receipts or Asset | December 31, 2005 | ||||||||||||||
Balance | Expense | Write-Offs | Balance | ||||||||||||||
(In thousands) | |||||||||||||||||
Lease obligations
|
$ | 5,341 | $ | 2,759 | $ | (2,736 | ) | $ | 5,364 | ||||||||
Fixed asset disposals
|
| 1,544 | (1,544 | ) | | ||||||||||||
Net proceeds from stores sold
|
| (2,250 | ) | 2,250 | | ||||||||||||
Other
costs
(1)
|
658 | 86 | (653 | ) | 91 | ||||||||||||
Total
|
$ | 5,999 | $ | 2,139 | $ | (2,683 | ) | $ | 5,455 | ||||||||
(1) | Goodwill impairment charges are the primary component of other costs. Additional costs include inventory disposals and the removal of signs and various assets from vacated locations. |
30
Comparison of the Years ended December 31, 2005 and 2004 |
31
Comparison of the Years ended December 31, 2004 and 2003 |
32
33
1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | ||||||||||||||
(In thousands, except per share data) | |||||||||||||||||
Year ended December 31, 2005
|
|||||||||||||||||
Revenues
|
$ | 601,809 | $ | 580,578 | $ | 573,507 | $ | 583,213 | |||||||||
Operating profit
|
85,992 | 72,988 | 30,980 | (2) | 59,811 | ||||||||||||
Net earnings
|
47,669 | (1) | 41,742 | 11,277 | 35,050 | (3) | |||||||||||
Basic earnings per common share
|
$ | 0.64 | $ | 0.56 | $ | 0.15 | $ | 0.50 | |||||||||
Diluted earnings per common share
|
$ | 0.63 | $ | 0.55 | $ | 0.15 | $ | 0.50 | |||||||||
Year ended December 31, 2004
|
|||||||||||||||||
Revenues
|
$ | 585,380 | $ | 572,985 | $ | 569,607 | $ | 585,283 | |||||||||
Operating profit
|
92,659 | 90,223 | 24,344 | (4) | 75,725 | ||||||||||||
Net earnings
|
52,209 | 51,194 | 5,573 | 46,879 | |||||||||||||
Basic earnings per common share
|
$ | 0.65 | $ | 0.64 | $ | 0.07 | $ | 0.63 | |||||||||
Diluted earnings per common share
|
$ | 0.63 | $ | 0.62 | $ | 0.07 | $ | 0.61 | |||||||||
Year ended December 31, 2003
|
|||||||||||||||||
Revenues
|
$ | 566,406 | $ | 553,260 | $ | 549,825 | $ | 558,659 | |||||||||
Operating profit
|
96,291 | 97,238 | 87,502 | 88,991 | |||||||||||||
Net earnings
|
50,959 | 35,300 | 43,738 | 51,499 | |||||||||||||
Basic earnings per common share
|
$ | 0.58 | $ | 0.40 | $ | 0.54 | $ | 0.64 | |||||||||
Diluted earnings per common share
|
$ | 0.57 | $ | 0.39 | $ | 0.52 | $ | 0.62 |
34
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
(As a percentage of revenues)
100.0
%
100.0
%
100.0
%
100.0
%
14.3
12.6
5.4
(2)
10.3
7.9
(1)
7.2
2.0
6.0
(3)
100.0
%
100.0
%
100.0
%
100.0
%
15.8
15.7
4.3
(4)
12.9
8.9
8.9
1.0
8.0
100.0
%
100.0
%
100.0
%
100.0
%
17.0
17.6
15.9
15.9
9.0
6.4
8.0
9.2
(1) | Includes the effects of a pre-tax legal reversion of $8.0 million associated with the settlement of a class action lawsuit in the state of California and a $2.0 million tax audit reserve credit associated with the examination and favorable resolution of our 1998 and 1999 federal tax returns. |
(2) | Includes the effects of a $13.0 million pre-tax restructuring expense as part of our store consolidation plan, $7.7 million in pre-tax expenses related to the damage caused by Hurricanes Katrina and Rita. |
(3) | Includes the effects of a $2.1 million pre-tax restructuring expense as part of our store consolidation plan, $1.1 million in pre-tax expenses related to the damage caused by Hurricanes Katrina, Rita and Wilma and a $3.3 million state tax reserve credit due to a change in estimate related to potential loss exposures. |
(4) | Includes the effects of a pre-tax legal settlement charge of $47.0 million associated with the settlement of a class action lawsuit in the state of California. |
35
36
2005 | 2004 | 2003 | |||||||||||
Stores at beginning of period
|
2,875 | 2,648 | 2,407 | ||||||||||
New store openings
|
67 | 94 | 101 | ||||||||||
Acquired stores remaining open
|
44 | 191 | 160 | ||||||||||
Closed stores
|
|||||||||||||
Merged with existing stores
|
170 | 48 | 20 | ||||||||||
Sold or closed with no surviving store
|
56 | 10 | | ||||||||||
Stores at end of period
|
2,760 | 2,875 | 2,648 | ||||||||||
Acquired stores closed and accounts merged with existing stores
|
39 | 111 | 220 | ||||||||||
Total approximate purchase price of acquisitions
|
$ | 38.3 million | $ | 195.2 million (1 | ) | $ | 126.1 million |
(1) | The total purchase price includes non-cash consideration of approximately $23.8 million in common stock issued and approximately $6.1 million in fair value assigned to the stock options assumed in connection with the acquisition of Rent Rite, Inc. |
37
Year Ending December 31, | ||||
(In thousands) | ||||
2006
|
$ | 3,500 | ||
2007
|
3,500 | |||
2008
|
3,500 | |||
2009
|
168,000 | |||
2010
|
166,250 | |||
Thereafter
|
| |||
$ | 344,750 | |||
| incur additional debt (including subordinated debt) in excess of $50 million at any one time outstanding; | |
| repurchase our capital stock and 7 1 / 2 % notes and pay cash dividends (subject to a restricted payments basket for which $113.1 million was available for use as of December 31, 2005); | |
| incur liens or other encumbrances; | |
| merge, consolidate or sell substantially all our property or business; |
38
| sell assets, other than inventory in the ordinary course of business; | |
| make investments or acquisitions unless we meet financial tests and other requirements; | |
| make capital expenditures; or | |
| enter into an unrelated line of business. |
Required Ratio | Actual Ratio | |||||||||||
Maximum consolidated leverage ratio
|
No greater than | 2.75:1 | 2.34:1 | |||||||||
Minimum consolidated interest coverage ratio
|
No less than | 4.0:1 | 6.42:1 | |||||||||
Minimum fixed charge coverage ratio
|
No less than | 1.50:1 | 1.84:1 |
| incur additional debt; | |
| sell assets or our subsidiaries; | |
| grant liens to third parties; | |
| pay cash dividends or repurchase stock (subject to a restricted payments basket for which $116.6 million was available for use as of December 31, 2005); and | |
| engage in a merger or sell substantially all of our assets. |
39
Payments Due by Period | ||||||||||||||||||||
Contractual Cash Obligations | Total | 2006 | 2007-2008 | 2009-2010 | Thereafter | |||||||||||||||
(In thousands) | ||||||||||||||||||||
Senior Credit Facilities (including current portion)
|
$ | 424,050 | (1) | $ | 7,800 | $ | 7,000 | $ | 409,250 | $ | 0 | |||||||||
7
1
/
2
% Senior
Subordinated
Notes
(2)
|
401,250 | 22,500 | 45,000 | 333,750 | 0 | |||||||||||||||
Operating Leases
|
466,435 | 149,976 | 220,515 | 93,234 | 2,710 | |||||||||||||||
Total
|
$ | 1,291,735 | $ | 180,276 | $ | 272,515 | $ | 836,234 | $ | 2,710 |
(1) | Includes amounts due under the Intrust line of credit. Amount referenced does not include the interest on our senior credit facilities. Our senior credit facilities bear interest at varying rates equal to the Eurodollar rate plus 1.00% to 2.00%. The weighted average Eurodollar rate on our outstanding debt at December 31, 2005 was 4.49%. |
(2) | Includes interest payments of $11.25 million on each of May 1 and November 1 of each year. |
40
Effect of New Accounting Pronouncements |
41
Item 7A. | Quantitative and Qualitative Disclosure about Market Risk. |
42
Item 8. | Financial Statements and Supplementary Data. |
Page | |||||
Rent-A-Center, Inc. and Subsidiaries
|
|||||
44 | |||||
46 | |||||
Consolidated Financial Statements
|
|||||
47 | |||||
48 | |||||
49 | |||||
50 | |||||
51 |
43
44
45
46
Table of Contents
Table of Contents
Year Ended December 31,
2005
2004
2003
(In thousands, except per share data)
$
2,084,757
$
2,071,866
$
1,998,952
177,292
166,594
152,984
26,139
24,304
22,203
7,903
3,568
3,083
37,794
41,398
45,057
5,222
5,525
5,871
2,339,107
2,313,255
2,228,150
452,583
450,035
432,696
129,624
119,098
112,283
10,889
10,512
10,639
1,358,760
1,277,926
1,180,115
36,319
39,472
43,248
1,988,175
1,897,043
1,778,981
82,290
75,481
66,635
11,705
10,780
12,512
(8,000
)
47,000
15,166
2,089,336
2,030,304
1,858,128
249,771
282,951
370,022
(7,924
)
4,173
35,260
46,195
40,960
48,577
(5,492
)
(5,637
)
(4,645
)
209,068
251,379
290,830
73,330
95,524
109,334
135,738
155,855
181,496
$
135,738
$
155,855
$
181,496
$
1.86
$
1.99
$
2.16
$
1.83
$
1.94
$
2.08
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
Table of Contents
Accumulated
Common Stock
Additional
Comprehensive
Paid-In
Retained
Treasury
Income
Shares
Amount
Capital
Earnings
Stock
(Loss)
Total
98,845
$
395
$
532,675
$
428,621
$
(115,565
)
$
(3,726
)
$
842,400
181,496
181,496
6,504
6,504
(2,778
)
(2,778
)
3,726
3,726
185,222
(273,175
)
(273,175
)
28
28
605
(451
)
(154
)
2,303
12
29,771
29,783
10,605
10,605
(33
)
(33
)
101,148
1,012
572,628
609,930
(388,740
)
794,830
155,855
155,855
(210,520
)
(210,520
)
15,617
8,237
23,854
6,123
6,123
1,150
11
16,604
16,615
7,514
7,514
102,298
1,023
618,486
765,785
(591,023
)
794,271
135,738
135,738
(146
)
(118,376
)
(118,522
)
2
2
690
7
9,512
9,519
2,469
2,469
(15
)
(30
)
(45
)
102,988
$
1,030
$
630,308
$
901,493
$
(709,399
)
$
$
823,432
Table of Contents
Year Ended December 31,
2005
2004
2003
(In thousands)
$
135,738
$
155,855
$
181,496
444,682
446,578
432,696
53,382
48,566
43,384
16,236
10,780
12,512
1,600
690
844
(41,827
)
30,113
46,776
4,173
23,329
(427,907
)
(456,316
)
(424,397
)
(4,134
)
(1,320
)
(9,027
)
30,106
(12,286
)
(8,752
)
(6,252
)
21,691
18,647
(13,727
)
82,506
24,904
187,897
331,030
342,412
(60,230
)
(72,096
)
(55,987
)
2,513
4,824
809
(38,321
)
(165,219
)
(126,119
)
(96,038
)
(232,491
)
(181,297
)
(118,376
)
(210,520
)
(273,175
)
9,519
16,615
29,783
300,000
(17,049
)
257,285
442,940
400,000
(290,956
)
(241,485
)
(432,690
)
(251,500
)
(93,057
)
(183,655
)
(102,897
)
(1,198
)
(85,116
)
58,218
58,825
143,941
85,723
$
57,627
$
58,825
$
143,941
$
43,933
$
38,789
$
56,401
$
97,190
$
75,712
$
68,805
Table of Contents
Principles of Consolidation and Nature of
Operations
Stock Split
Rental Merchandise
Table of Contents
Cash Equivalents
Revenue
Receivables and Allowance for Doubtful Accounts
Table of Contents
Property Assets and Related Depreciation
Intangible Assets and Amortization
Accounting for Impairment of Long-Lived Assets
Derivative Instruments and Hedging Activities
Table of Contents
Income Taxes
Earnings Per Common Share
Advertising Costs
Stock-Based Compensation
Year Ended December 31,
2005
2004
2003
(In thousands, except per share data)
$
135,738
$
155,855
$
181,496
9,152
9,868
15,687
$
126,586
$
145,987
$
165,809
$
1.86
$
1.99
$
2.16
$
1.73
$
1.87
$
1.97
$
1.83
$
1.94
$
2.08
$
1.71
$
1.82
$
1.90
Table of Contents
Use of Estimates
Other Income
New Accounting Pronouncements
Table of Contents
At December 31,
2005
2004
(In thousands)
$
18,356
$
16,919
2,757
2,607
1,956
23,720
18,875
(3,317
)
(2,606
)
$
20,403
$
16,269
At December 31,
2005
2004
2003
(In thousands)
$
2,606
$
1,918
$
1,420
1,581
1,101
753
114
(1,271
)
(744
)
(312
)
287
331
57
$
3,317
$
2,606
$
1,918
Table of Contents
December 31,
2005
2004
(In thousands)
$
984,301
$
999,265
395,323
402,818
$
588,978
$
596,447
$
210,865
$
208,339
49,163
45,675
$
161,702
$
162,664
December 31,
2005
2004
2003
(In thousands)
$
760,422
$
682,367
$
631,724
9,233
68,317
58,942
655,553
654,261
612,276
(444,682
)
(446,578
)
(432,696
)
(140,513
)
(129,610
)
(122,922
)
(56,341
)
(54,797
)
(50,216
)
(30,792
)
(13,538
)
(14,741
)
$
752,880
$
760,422
$
682,367
(1)
Other inventory deletions include loss/damage waiver claims and
unrepairable and missing merchandise, as well as acquisition
charge-offs. 2005 inventory deletions also include
$4.5 million in write-offs associated with Hurricanes
Katrina, Rita and Wilma, as well as $6.6 million associated
with the sale of 35 stores pursuant to our store consolidation
plan during the fourth quarter.
December 31,
2005
2004
(In thousands)
$
149,998
$
175,735
13,713
21,984
145,133
147,418
4,248
11,118
1,988
324,210
347,125
174,306
202,307
$
149,904
$
144,818
Table of Contents
December 31, 2005
December 31, 2004
Avg.
Gross
Avg.
Gross
Life
Carrying
Accumulated
Life
Carrying
Accumulated
(years)
Amount
Amortization
(years)
Amount
Amortization
10
$
3,000
$
2,850
10
$
3,000
$
2,550
3
6,040
4,423
3
5,902
3,197
1.5
32,934
31,335
1.5
30,644
24,810
41,974
38,608
39,546
30,557
1,025,112
99,152
1,012,577
99,162
$
1,067,086
$
137,760
$
1,052,123
$
129,719
$
16,236
$
10,780
$
12,512
Estimated
Amortization Expense
(In thousands)
$
3,167
191
8
$
3,366
2005
2004
(In thousands)
$
913,415
$
788,059
25,947
112,209
(8,198
)
(5,204
)
13,147
$
925,960
$
913,415
Table of Contents
(1)
Goodwill impairment of approximately $4.5 million was
included in our restructuring charges relating to our store
consolidation plan and $3.7 million relating to Hurricane
Katrina was included in amortization expense.
Acquisitions
Year Ended December 31,
2005
2004
2003
(Dollar amounts in thousands)
44
191
160
39
111
220
38
48
39
$
38,321
$
195,196
(1)
$
126,119
$
25,947
$
112,209
$
48,445
33
389
4,515
2,282
9,991
9,938
751
4,203
4,166
9,233
68,317
58,942
75
87
113
(1)
The total purchase price includes non-cash consideration of
approximately $23.8 million in common stock issued and
approximately $6.1 million in fair value assigned to the
stock options assumed in connection with the acquisition of Rent
Rite, Inc.
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Fair Values
(In thousands)
$
50,100
4,300
7,900
4,300
33,800
$
100,400
Fair Values
(In thousands)
$
18,644
1,262
3,180
242
36,568
$
59,896
Fair Values
(In thousands)
$
41,337
2,864
4,553
100
60,192
$
109,046
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Expense Recognized
Estimated Remaining
Closing Plan Estimate
During 2005
Charges for 2006
(In thousands)
$ 8,661 - $13,047
$
9,261
$
0 - $3,786
2,630 -
4,211
3,333
0 - 878
(2,250
)
830 - 7,875
4,822
0 - 3,053
$12,121 - $25,133
$
15,166
$
0 - $7,717
Cash (Payments)
September 30,
Charges to
Receipts or Asset
December 31,
2005 Balance
Expense
Write-Offs
2005 Balance
(In thousands)
$
5,341
$
2,759
$
(2,736
)
$
5,364
1,544
(1,544
)
(2,250
)
2,250
658
86
(653
)
91
$
5,999
$
2,139
$
(2,683
)
$
5,455
(1)
Goodwill impairment charges are the primary component of other
costs. Additional costs include inventory disposals and the
removal of signs and various assets from vacated locations.
Table of Contents
Table of Contents
2005
2004
Facility
Maximum
Amount
Amount
Maximum
Amount
Amount
Maturity
Facility
Outstanding
Available
Facility
Outstanding
Available
(In thousands)
2010
$
350,000
$
344,750
$
$
350,000
$
348,250
$
2009
250,000
75,000
67,534
250,000
60,000
84,435
600,000
419,750
67,534
600,000
408,250
84,435
10,000
4,300
5,700
10,000
10,000
$
610,000
$
424,050
$
73,234
$
610,000
$
408,250
$
94,435
(1)
At December 31, 2005 and 2004, the amounts available under
the Companys revolving facility were reduced by
approximately $107.5 million and $105.6 million,
respectively, for outstanding letters of credit used to support
the Companys insurance obligations. The Company provides
assurance to its insurance providers that if they are not able
to draw funds from the Company for claims paid, they have the
ability to draw against the Companys letters of credit. At
that time, the Company would then owe the drawn amount to the
financial institution providing the letter of credit. One of the
Companys letters of credit is renewed automatically every
year unless the Company notifies the institution not to renew.
The other letter of credit expires in August 2006, but is
automatically renewed each year for a one year period unless the
institution notifies the Company no later than thirty days prior
to the applicable expiration date that such institution does not
elect to renew the letter of credit for such additional one year
period.
incur additional debt (including subordinated debt) in excess of
$50 million at any one time outstanding;
repurchase its capital stock and
7
1
/
2
% notes
and pay cash dividends (subject to a restricted payments basket
for which $113.1 million was available for use as of
December 31, 2005);
incur liens or other encumbrances;
merge, consolidate or sell substantially all its property or
business;
sell assets, other than inventory in the ordinary course of
business;
make investments or acquisitions unless it meets financial tests
and other requirements;
Table of Contents
make capital expenditures; or
enter into an unrelated line of business.
Required Ratio
Actual Ratio
No greater than
2.75:1
2.34:1
No less than
4.0:1
6.42:1
No less than
1.50:1
1.84:1
Year Ending December 31,
(In thousands)
$
3,500
3,500
3,500
168,000
166,250
$
344,750
Table of Contents
incur additional debt;
sell assets or its subsidiaries;
grant liens to third parties;
pay cash dividends or repurchase stock (subject to a restricted
payments basket for which $116.6 million was available for
use as of December 31, 2005); and
engage in a merger or sell substantially all of its assets.
December 31,
2005
2004
(In thousands)
$
27,967
$
27,190
97,326
87,647
28,882
23,653
5,455
5,224
4,605
4,476
48,975
22,501
15,765
$
191,831
$
207,835
Table of Contents
Year Ended December 31,
2005
2004
2003
35.0
%
35.0%
35.0%
(0.3
)%
(1)
2.5%
2.3%
0.1
%
0.1%
0.1%
0.3
%
0.4%
0.2%
35.1
%
38.0%
37.6%
(1)
Includes the effects of a $3.3 million state tax reserve
due to a change in estimate related to potential loss exposures.
Table of Contents
Year Ended December 31,
2005
2004
2003
(In thousands)
$
108,667
$
60,996
$
53,615
5,073
1,844
9,382
1,417
2,571
2,232
115,157
65,411
65,229
(35,728
)
22,307
43,349
(6,099
)
7,806
756
(41,827
)
30,113
44,105
$
73,330
$
95,524
$
109,334
December 31,
2005
2004
(In thousands)
$
2,101
$
2,101
8,058
12,968
14,693
15,479
827
1,501
25,679
32,049
(827
)
(1,501
)
(130,019
)
(191,960
)
(16,037
)
(1,619
)
(146,056
)
(193,579
)
$
(121,204
)
$
(163,031
)
Table of Contents
Year Ending December 31,
(In thousands)
$
149,976
123,725
96,790
64,299
28,935
2,710
$
466,435
Table of Contents
Table of Contents
State Wage and Hour Class Actions
Table of Contents
Table of Contents
Table of Contents
At December 31,
2005
2004
2003
Weighted
Weighted
Weighted
Average
Average
Average
Exercise
Exercise
Exercise
Shares
Price
Shares
Price
Shares
Price
5,231,538
$
17.62
6,206,897
$
15.78
8,627,690
$
14.13
1,001,000
23.80
838,500
29.30
1,335,438
23.31
(690,608
)
13.78
(1,144,295
)
14.51
(2,302,494
)
12.94
(522,953
)
24.13
(669,564
)
20.55
(1,453,737
)
17.37
5,018,977
$
18.70
5,231,538
$
17.62
6,206,897
$
15.78
3,406,505
$
16.16
2,612,207
$
13.98
1,922,152
$
11.88
Options Outstanding
Weighted Average
Number
Remaining
Weighted Average
Range of Exercise Prices
Outstanding
Contractual Life
Exercise Price
75,103
2.35 years
$
6.39
1,461,292
5.22 years
$
10.05
475,730
5.05 years
$
13.19
538,033
7.48 years
$
18.78
1,189,393
7.23 years
$
21.54
1,178,490
8.44 years
$
28.29
100,936
8.25 years
$
33.34
5,018,977
Table of Contents
Options Exercisable
Number
Weighted Average
Range of Exercise Prices
Exercisable
Exercise Price
75,103
$
6.38
1,461,292
$
10.05
393,223
$
13.12
336,906
$
18.56
605,273
$
21.36
477,522
$
28.57
57,186
$
33.34
3,406,505
Table of Contents
Net Earnings
Shares
Per Share
(In thousands, except per share data)
$
135,738
73,018
$
1.86
1,090
$
135,738
74,108
$
1.83
$
155,855
78,150
$
1.99
2,097
$
155,855
80,247
$
1.94
$
181,496
84,139
$
2.16
3,069
$
181,496
87,208
$
2.08
Table of Contents
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
(In thousands, except per share data)
$
601,809
$
580,578
$
573,507
$
583,213
433,545
428,372
421,499
426,276
85,992
72,988
30,980
(2)
59,811
47,669
(1)
41,742
11,277
35,050
(3)
$
0.64
$
0.56
$
0.15
$
0.50
$
0.63
$
0.55
$
0.15
$
0.50
$
585,380
$
572,985
$
569,607
$
585,283
422,417
423,831
419,282
428,608
92,659
90,223
24,344
(4)
75,725
52,209
51,194
5,573
46,879
$
0.65
$
0.64
$
0.07
$
0.63
$
0.63
$
0.62
$
0.07
$
0.61
$
566,406
$
553,260
$
549,825
$
558,659
408,416
408,648
403,729
408,491
96,291
97,238
87,502
88,991
50,959
35,300
43,738
51,499
$
0.58
$
0.40
$
0.54
$
0.64
$
0.57
$
0.39
$
0.52
$
0.62
(1)
Includes the effects of a pre-tax legal reversion of
$8.0 million associated with the settlement of a class
action lawsuit in the state of California and a
$2.0 million tax audit reserve credit associated with the
examination and favorable resolution of our 1998 and 1999
federal tax returns.
(2)
Includes the effects of a $13.0 million pre-tax
restructuring expense as part of our store consolidation plan
and $7.7 million in pre-tax expenses related to the damage
caused by Hurricanes Katrina and Rita.
(3)
Includes the effects of a $2.1 million pre-tax
restructuring expense as part of our store consolidation plan,
$1.1 million in pre-tax expenses related to the damage
caused by Hurricanes Katrina, Rita and Wilma and a
$3.3 million state tax reserve credit for a reserve
adjustment due to a change in estimate related to potential loss
exposures.
(4)
Includes the effects of a pre-tax legal settlement charge of
$47.0 million associated with the settlement of a class
action lawsuit in the state of California.
Table of Contents
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. |
Item 9A. | Controls and Procedures. |
Item 10. | Directors and Executive Officers of the Registrant.(*) |
Item 11. | Executive Compensation.(*) |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.(*) |
Item 13. | Certain Relationships and Related Transactions.(*) |
Item 14. | Principal Accountant Fees and Services.(*) |
* | The information required by Items 10, 11, 12, 13 and 14 is or will be set forth in the definitive proxy statement relating to the 2006 Annual Meeting of Stockholders of Rent-A-Center, Inc., which is to be filed with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended. This definitive proxy statement relates to a meeting of stockholders involving the election of directors and the portions therefrom required to be set forth in this Form 10-K by Items 10, 11, 12, 13 and 14 are incorporated herein by reference pursuant to General Instruction G(3) to Form 10-K. |
77
Item 15. | Exhibits and Financial Statement Schedules. |
78
79
Rent-A-Center, Inc.
By:
/s/
Robert D. Davis
Robert D. Davis
Senior Vice President Finance,
Treasurer and Chief Financial Officer
Signature
Title
Date
/s/
Mark E. Speese
Mark E. Speese
Chairman of the Board and
Chief Executive Officer (Principal Executive Officer)
March 10, 2006
/s/
Mitchell E. Fadel
Mitchell E. Fadel
President, Chief Operating Officer
and Director
March 10, 2006
/s/
Robert D. Davis
Robert D. Davis
Senior Vice President Finance, Treasurer and Chief
Financial Officer
(Principal Financial and
Accounting Officer)
March 10, 2006
/s/
Richard K. Armey
Richard K. Armey
Director
March 10, 2006
/s/
Laurence M. Berg
Laurence M. Berg
Director
March 10, 2006
/s/
Mary Elizabeth
Burton
Mary Elizabeth Burton
Director
March 10, 2006
/s/
Peter P. Copses
Peter P. Copses
Director
March 10, 2006
/s/
Michael J. Gade
Michael J. Gade
Director
March 10, 2006
/s/
J. V. Lentell
J. V. Lentell
Director
March 10, 2006
Table of Contents
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Exhibit No.
Description
2
.1
Agreement and Plan of Merger, dated as of April 27, 2004,
by and between Rent-A-Center, Inc., RAC RR, Inc. and Rent Rite,
Inc. d/b/a Rent Rite Rental Purchase (Pursuant to the rules of
the SEC, the schedules and exhibits have been omitted. Upon the
request of the SEC, Rent-A-Center, Inc. will supplementally
supply such schedules and exhibits to the SEC.) (Incorporated
herein by reference to Exhibit 2.8 to the registrants
Quarterly Report on Form 10-Q for the quarter ended
March 31, 2004.)
3
.1
Certificate of Incorporation of Rent-A-Center, Inc., as amended
(Incorporated herein by reference to Exhibit 3.1 to the
registrants Current Report on Form 8-K dated as of
December 31, 2002.)
3
.2
Certificate of Amendment to the Certificate of Incorporation of
Rent-A-Center, Inc., dated May 19, 2004 (Incorporated
herein by reference to Exhibit 3.2 to the registrants
Quarterly Report on Form 10-Q for the quarter ended
June 30, 2004.)
3
.3
Amended and Restated Bylaws of Rent-A-Center, Inc. (Incorporated
herein by reference to Exhibit 3.(ii) to the
registrants Current Report on Form 8-K dated as of
September 20, 2005.)
4
.1
Form of Certificate evidencing Common Stock (Incorporated herein
by reference to Exhibit 4.1 to the registrants
Registration Statement on Form S-4/ A filed on
January 13, 1999.)
4
.2
Certificate of Elimination of Series A Preferred Stock
(Incorporated herein by reference to Exhibit 4.2 to the
registrants Quarterly Report on Form 10-Q for the
quarter ended September 30, 2003.)
4
.3
Certificate of Designations, Preferences and relative Rights and
Limitations of Series C Preferred Stock of Rent-A-Center,
Inc. (Incorporated herein by reference to Exhibit 4.4 to
the registrants Registration Statement on Form S-4
filed July 11, 2003.)
4
.4
Certificate of Elimination of Series C Preferred Stock
(Incorporated herein by reference to Exhibit 3.(i) to the
registrants Current Report on Form 8-K dated as of
September 20, 2005.)
4
.5
Indenture, dated as of May 6, 2003, by and among
Rent-A-Center, Inc., as Issuer, Rent-A-Center East, Inc.,
ColorTyme, Inc., Rent-A-Center West, Inc., Get It Now, LLC,
Rent-A-Center Texas, L.P. and Rent-A-Center Texas, L.L.C., as
Guarantors, and The Bank of New York, as Trustee (Incorporated
herein by reference to Exhibit 4.9 to the registrants
Quarterly Report on Form 10-Q for the quarter ended
March 31, 2003.)
4
.6
First Supplemental Indenture, dated as of December 4, 2003,
between Rent-A-Center, Inc., as Issuer, the Guarantors named
therein, as Guarantors, and The Bank of New York, as Trustee
(Incorporated herein by reference to Exhibit 4.6 to the
registrants Annual Report on Form 10-K/ A for the
year ended December 31, 2003.)
4
.7
Second Supplemental Indenture, dated as of April 26, 2004,
between Rent-A-Center, Inc., as Issuer, the Guarantors named
therein, as Guarantors, and The Bank of New York, as Trustee
(Incorporated herein by reference to Exhibit 4.7 to the
registrants Quarterly Report on Form 10-Q for the
quarter ended March 31, 2004.)
4
.8
Third Supplemental Indenture, dated as of May 7, 2004,
between Rent-A-Center, Inc., as Issuer, the Guarantors named
therein, as Guarantors, and The Bank of New York, as Trustee
(Incorporated herein by reference to Exhibit 4.8 to the
registrants Quarterly Report on Form 10-Q for the
quarter ended June 30, 2004.)
4
.9
Fourth Supplemental Indenture, dated as of May 14, 2004,
between Rent-A-Center, Inc., as Issuer, the Guarantors named
therein, as Guarantors, and The Bank of New York, as Trustee
(Incorporated herein by reference to Exhibit 4.9 to the
registrants Quarterly Report on Form 10-Q for the
quarter ended June 30, 2004.)
4
.10
Fifth Supplemental Indenture, dated as of June 30, 2005,
between Rent-A-Center, Inc., as Issuer, the Guarantors named
therein, as Guarantors, and The Bank of New York, as Trustee
(Incorporated herein by reference to Exhibit 4.10 to the
registrants Quarterly Report on Form 10-Q for the
quarter ended June 30, 2005.)
4
.11
Form of 2003 Exchange Note (Incorporated herein by reference to
Exhibit 4.11 to the registrants Registration
Statement on Form S-4 filed July 11, 2003.)
Table of Contents
Exhibit No.
Description
10
.1
Amended and Restated Rent-A-Center, Inc. Long-Term Incentive
Plan (Incorporated herein by reference to Exhibit 10.1 to
the registrants Quarterly Report on Form 10-Q for the
quarter ended September 30, 2003.)
10
.2
Amended and Restated Credit Agreement, dated as of May 28,
2003, as amended and restated as of July 14, 2004, among
Rent-A-Center, Inc., the several lenders from time to time
parties thereto, Calyon New York Branch, SunTrust Bank and Union
Bank of California, N.A., as Documentation Agents, Lehman
Commercial Paper Inc., as Syndication Agent, and JPMorgan Chase
Bank, as Administrative Agent (Incorporated herein by reference
to Exhibit 10.1 to the registrants Current Report on
Form 8-K dated July 15, 2004.)
10
.3
Amended and Restated Guarantee and Collateral Agreement, dated
as of May 28, 2003, as amended and restated as of
July 14, 2004, made by Rent-A-Center, Inc. and certain of
its Subsidiaries in favor of JPMorgan Chase Bank, as
Administrative Agent (Incorporated herein by reference to
Exhibit 10.2 to the registrants Current Report on
Form 8-K dated July 15, 2004.)
10
.4
Fifth Amended and Restated Stockholders Agreement, dated as of
August 13, 2004, by and among Apollo Investment
Fund IV, L.P., Apollo Overseas Partners IV, L.P., Mark E.
Speese, Rent-A-Center, Inc., and certain other persons
(Incorporated herein by reference to Exhibit 10.3 to the
registrants Registration Statement on Form S-3/ A
filed on September 21, 2004.)
10
.5
Franchisee Financing Agreement, dated April 30, 2002, but
effective as of June 28, 2002, by and between Texas Capital
Bank, National Association, ColorTyme, Inc. and Rent-A-Center,
Inc. (Incorporated herein by reference to Exhibit 10.14 to
the registrants Quarterly Report on Form 10-Q for the
quarter ended June 30, 2002.)
10
.6
Supplemental Letter Agreement to Franchisee Financing Agreement,
dated May 26, 2003, by and between Texas Capital Bank,
National Association, ColorTyme, Inc. and Rent-A-Center, Inc.
(Incorporated herein by reference to Exhibit 10.23 to the
registrants Registration Statement on Form S-4 filed
July 11, 2003.)
10
.7
First Amendment to Franchisee Financing Agreement, dated
August 30, 2005, by and among Texas Capital Bank, National
Association, ColorTyme, Inc. and Rent-A-Center East, Inc.
(Incorporated herein by reference to Exhibit 10.7 to the
registrants Quarterly Report on Form 10-Q for the
quarter ended September 30, 2005.)
10
.8
Amended and Restated Franchise Financing Agreement, dated
October 1, 2003, by and among Wells Fargo Foothill, Inc.,
ColorTyme, Inc. and Rent-A-Center East, Inc. (Incorporated
herein by reference to Exhibit 10.22 to the
registrants Quarterly Report on Form 10-Q for the
quarter ended September 30, 2003.)
10
.9
First Amendment to Amended and Restated Franchisee Financing
Agreement, dated December 15, 2003, by and among Wells
Fargo Foothill, Inc., ColorTyme, Inc. and Rent-A-Center East,
Inc. (Incorporated herein by reference to Exhibit 10.23 to
the registrants Annual Report on Form 10-K/ A for the
year ended December 31, 2003.)
10
.10
Second Amendment to Amended and Restated Franchisee Financing
Agreement, dated as of March 1, 2004, by and among Wells
Fargo Foothill, Inc., ColorTyme, Inc. and Rent-A-Center East,
Inc. (Incorporated herein by reference to Exhibit 10.24 to
the registrants Quarterly Report on Form 10-Q for the
quarter ended March 31, 2004.)
10
.11
Form of Stock Option Agreement issuable to Directors pursuant to
the Amended and Restated Rent-A-Center, Inc. Long-Term Incentive
Plan (Incorporated herein by reference to Exhibit 10.20 to
the registrants Annual Report on Form 10-K for the
year ended December 31, 2004.)
10
.12
Form of Stock Option Agreement issuable to management pursuant
to the Amended and Restated Rent-A-Center, Inc. Long-Term
Incentive Plan (Incorporated herein by reference to
Exhibit 10.21 to the registrants Annual Report on
Form 10-K for the year ended December 31, 2004.)
10
.13
Summary of Director Compensation (Incorporated herein by
reference to Exhibit 10.22 to the registrants Annual
Report on Form 10-K for the year ended December 31,
2004.)
10
.14
Summary of Named Executive Officer Compensation (Incorporated
herein by reference to Exhibit 10.23 to the
registrants Current Report on Form 8-K dated
December 21, 2005.)
Table of Contents
Exhibit No.
Description
10
.15*
Form of Stock Compensation Agreement issuable to management
pursuant to the Amended and Restated Rent-A-Center, Inc.
Long-Term Incentive Plan
10
.16*
Form of Long-Term Incentive Cash Award issuable to management
pursuant to the Amended and Restated Rent-A-Center, Inc.
Long-Term Incentive Plan
10
.17*
Form of Loyalty and Confidentiality Agreement entered into with
management
21
.1
Subsidiaries of Rent-A-Center, Inc. (Incorporated herein by
reference to Exhibit 21.1 to the registrants
Quarterly Report on Form 10-Q for the quarter ended
June 30, 2005.)
23
.1*
Consent from Independent Registered Public Accounting Firm
31
.1*
Certification pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934 implementing Section 302 of the
Sarbanes-Oxley Act of 2002 by Mark E. Speese
31
.2*
Certification pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934 implementing Section 302 of the
Sarbanes-Oxley Act of 2002 by Robert D. Davis
32
.1*
Certification pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 by Mark E. Speese
32
.2*
Certification pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 by Robert D. Davis
Management contract or compensatory plan or arrangement
*
Filed herewith.
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RENT-A-CENTER, INC.
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Executive | ||||
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RENT-A-CENTER, INC. | ||||
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By: | |||
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Executive |
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THE COMPANY
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EMPLOYEE
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<employee name> |
1. | I have reviewed this annual report on Form 10-K of Rent-A-Center, Inc; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Mark E. Speese | ||||
Mark E. Speese | ||||
Chairman of the Board and Chief Executive Officer |
1. | I have reviewed this annual report on Form 10-K of Rent-A-Center, Inc; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | ||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | ||
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | ||
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and | ||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Robert D. Davis | ||||
Robert D. Davis | ||||
Senior Vice President-Finance, Treasurer and Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Mark E. Speese | ||||
Mark E. Speese | ||||
Chairman of the Board and Chief Executive Officer | ||||
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Robert D. Davis | ||||
Robert D. Davis | ||||
Senior Vice President -- Finance, Treasurer and Chief Financial Officer | ||||