Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of July 27, 2004:October 26, 2005:

The statements, other than statements of historical facts, included in this report are forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “would,” “expect,” “intend,” “could,” “estimate,” “should,” “anticipate” or “believe.” We believe that the expectations reflected in such forward-looking statements are accurate. However, we cannot assure you that these expectations will occur. Our actual future performance could differ materially from such statements. Factors that could cause or contribute to these differences include, but are not limited to:

Additional important factors that could cause our actual results to differ materially from our expectations are discussed under Risk Factors in our Annual Report on Form 10-K for our fiscal year ended December 31, 2004. You should not unduly rely on these forward-looking statements, which speak only as of the date of this report. Except as required by law, we are not obligated to publicly release any revisions to these forward-looking statements to reflect events or circumstances occurring after the date of this report or to reflect the occurrence of unanticipated events.

We are the largest rent-to-own operator in the United States with an approximate 35%34% market share based on store count. At JuneSeptember 30, 2005, we operated 2,8922,787 company-owned stores nationwide and in Canada and Puerto Rico, including 21 stores located in Wisconsin and operated by our subsidiary Get It Now, LLC under the name “Get It Now” and sixseven stores located in Canada and operated by our subsidiary Rent-A-Centre Canada, Ltd., under the name “Rent-A-Centre.” Another of our subsidiaries, ColorTyme, is a national franchisor of rent-to-own stores. At JuneSeptember 30, 2005, ColorTyme had 281287 franchised stores in 38 states, 269275 of which operated under the ColorTyme name and 12 stores of which operated under the Rent-A-Center name.

Our stores generally offer high quality durable products such as major consumer electronics, appliances, computers, and furniture and accessories under flexible rental purchase agreements that generally allow the customer to obtain ownership of the merchandise at the conclusion of an agreed-upon rental period. These rental purchase agreements are designed to appeal to a wide variety of customers by allowing them to obtain merchandise that they might otherwise be unable to obtain due to insufficient cash resources or a lack of access to credit. These agreements also cater to customers who only have a temporary need or who simply desire to rent rather than purchase the merchandise.

Rental payments are made generally on a weekly basis and, together with applicable fees, constitute our primary revenue source. Our expenses primarily relate to merchandise costs and the operations of our stores, including salaries and benefits for our employees, occupancy expense for our leased real estate, merchandise delivery expenses, advertising expenses, lost, damaged, or stolen merchandise, fixed asset depreciation, and corporate and other expenses.

We have pursued an aggressive growth strategy since 1993. We have sought to acquire underperforming rent-to-own stores to which we could apply our operating model as well as open new stores. As a result, acquired stores have generally experienced more significant revenue growth during the initial periods following their acquisition than in subsequent periods. Because of significant growth since our formation, our historical results of operations and period-to-period comparisons of such results and other financial data, including the rate of earnings growth, may not be meaningful or indicative of future results.

We plan to accomplish our future growth through selective and opportunistic acquisitions of existing rent-to-own stores, and development of new rent-to-own stores. Typically, a newly opened rent-to-own store is profitable on a monthly basis in the ninth to twelfth month after its initial opening. Historically, a typical store has achieved cumulative break-even profitability in 18 to 24 months after its initial opening. Total financing requirements of a typical new store approximate $500,000, with roughly 75% of that amount relating to the purchase of rental merchandise inventory. A newly opened store historically has achieved results consistent with other stores that have been operating within the system for greater than two years by the end of its third year of operation. As a result, our quarterly earnings are impacted by how many new stores we opened during a particular quarter and the quarters preceding it. In addition, we strategically open or acquire stores near market areas served by existing stores (“cannibalize”) to enhance service levels, gain incremental sales and increase market penetration. This planned cannibalization may negatively impact our same store revenue. There can be no assurance that we will open any new rent-to-own stores in the future, or as to the number, location or profitability thereof.

Furthermore, we are evaluating other growth strategies, including offering additional products and services designed to appeal to our customer demographic, both through our new and existing rent-to-own stores as well as the entry into additional lines of business. On June 30, 2005, we acquired 27 stores in six Western states which offer an array of financial services in addition to traditional rent-to-own products. We intend to begin offering similar financial services in up to 25 existing Rent-A-Center store locations during the fourth quarter of 2005. There can be no assurance that we will be successful in our efforts to expand our operations to include such complementary financial products or services, or that such operations, should they be added, will prove to be profitable.

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. In applying accounting principles, we must often make individual estimates and assumptions regarding expected outcomes or uncertainties. Our estimates, judgments and assumptions are continually evaluated based on available information and experience. Because of the use of estimates inherent in the financial reporting process, actual results could differ from those estimates. We believe the following are areas where the degree of judgment and complexity in determining amounts recorded in our consolidated financial statements make the accounting policies critical.

Self-Insurance Liabilities.We have self-insured retentions with respect to losses under our workers’ compensation, general liability, auto liability and employee health insurance policies. We establish reserves for our liabilities associated with these losses by obtaining forecasts for the ultimate expected losses and estimating amounts needed to pay losses within our self-insured retentions.

We make assumptions on our liabilities within our self-insured retentions using actuarial loss forecasts, which are prepared using methods and assumptions in accordance with standard actuarial practice, and third party claim administrator loss estimates which are based on known facts surrounding individual claims. Each quarter, we reevaluate our estimate of liability within our self-insured retentions, including our assumptions related to our loss forecasts and estimates, using actuarial loss forecasts updated during the quarter and currently valued third party claim administrator loss estimates. We evaluate the adequacy of our accruals by comparing amounts accrued on our balance sheet for anticipated losses to our updated actuarial loss forecasts and third party claim administrator loss estimates, and make adjustments to our accruals as needed based upon such review.

Over the previous 10 years, our loss exposure has increased, primarily as a result of our growth. We instituted procedures to manage our loss exposure through a greater focus on the risk management function, a transitional duty program for injured workers, ongoing safety and accident prevention training, and various programs designed to minimize losses and improve our loss experience in our store locations.

As of JuneSeptember 30, 2005, the net amount accrued for losses within our self-insured retentions was $92.5$97.8 million, as compared to $81.4$83.6 million at JuneSeptember 30, 2004. The increase in the net amount accrued for the 2005 period is a result of an estimate for new claims expected for the current policy period, which incorporates our store growth, increased number of employees, increases in health care costs, and the net effect of prior period claims which have closed or for which additional development or changes in estimates have occurred.

Litigation Reserves.We are the subject of litigation in the ordinary course of our business. Our litigation involves, among other things, actions relating to claims that our rental purchase agreements constitute installment sales contracts, violate state usury laws or violate other state laws to protect consumers, claims asserting violations of wage and hour laws in our employment practices, as well as claims we violated the federal securities laws. In preparing our financial statements at a given point in time, we account for these contingencies pursuant to the provisions of SFAS No. 5, which requires that we accrue for losses that are both probable and reasonably estimable.

Each quarter, we make estimates of our probable liabilities, if reasonably estimable, and record such amounts in our consolidated financial statements. These amounts represent our best estimate, or may be the minimum range of probable loss when no single best estimate is determinable. We, together with our counsel, monitor developments related to these legal matters and, when appropriate, adjustments are made to reflect current facts and circumstances. As of JuneSeptember 30, 2005, we had accrued $1.9 million in connection with the prospective settlement of thePucci/Chess matter, and an additional $585,000$400,000 for anticipated legal fees and expenses with respect to our other outstanding litigation (other than thePucci/Chessmatter) as compared to $2.5$49.6 million for the quarter ended JuneSeptember 30, 2004, all of which relatedwe had accrued $47.0 million in connection with the settlement of theGriego/Carrillomatter, and an additional $2.6 million for probable litigation costs with respect to anticipated legal fees and expenses for our then outstanding litigation.litigation (other than theGriego/Carrillomatter). The amounts accrued, relating to the prospective settlement in thePucci/Chessmatter, and for anticipated legal fees and expenses with respect to our remaining outstanding litigation (other than thePucci/Chessmatter), represent our estimate of the probable liabilities with respect to such litigation. The ultimate outcome of our litigation is uncertain, and the amount of loss we may incur, if any, cannot in our judgment be reasonably estimated. Additional developments in our litigation or other adverse or positive developments or rulings in our litigation, could affect our assumptions and thus, our accrual.

If we make changes to our accruals in any of these areas in accordance with the policies described above, these changes would impact our earnings. Increases to our accruals would reduce earnings and similarly, reductions to our accruals would increase our earnings. A pre-tax change of $1.2$1.1 million in our estimates would result in a corresponding $.01 change in our earnings per share.

Based on an assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, we believe that our consolidated financial statements provide a meaningful and fair perspective of our company. However, we do not suggest that other general risk factors, such as those discussed in our Annual Report on Form 10-K as well as changes in our growth objectives or performance of new or acquired stores, could not adversely impact our consolidated financial position, results of operations and cash flows in future periods.

Our significant accounting policies are summarized below and in Note A to our consolidated financial statements included in our Annual Report on Form 10-K.

Revenue. Merchandise is rented to customers pursuant to rental-purchase agreements which provide for weekly, semi-monthly or monthly rental terms with non-refundable rental payments. Generally, the customer has the right to acquire title either through a purchase option or through payment of all required rentals. Rental revenue and fees are recognized over the rental term as payments are received and merchandise sales revenue is recognized when the customer exercises his/her purchase option and pays the cash price due. Revenue for the total amount of the rental purchase agreement is not accrued because the customer can cancel the rental contract at any time and we cannot enforce collection for non-payment of rents. Because Get It Now makes retail sales on an installment credit basis, Get It Now’s revenue is recognized at the time of such retail sale, as is the cost of the merchandise sold, net of a provision for uncollectible accounts.

Franchise Revenue.Revenue from the sale of rental merchandise is recognized upon shipment of the merchandise to the franchisee. Franchise fee revenue is recognized upon completion of substantially all services and satisfaction of all material conditions required under the terms of the franchise agreement.

Depreciation of Rental Merchandise. Depreciation of rental merchandise is included in the cost of rentals and fees on our statement of earnings. We depreciate our rental merchandise using the income forecasting method. The income forecasting method of depreciation we use does not consider salvage value and does not allow the depreciation of rental merchandise during periods when it is not generating rental revenue. The objective of this method of depreciation is to provide for consistent depreciation expense while the merchandise is on rent. We accelerate the depreciation on computers that are 24 months old or older and which have become idle using the straight-line method for a period of at least six months, generally not to exceed an aggregate depreciation period of 30 months. The purpose is to better reflect the depreciable life of a computer in our stores.

Cost of Merchandise Sold. Cost of merchandise sold represents the book value net of accumulated depreciation of rental merchandise at time of sale.

Salaries and Other Expenses. Salaries and other expenses include all salaries and wages paid to store level employees, together with market managers’ salaries, travel and occupancy, including any related benefits and taxes, as well as all store level general and administrative expenses and selling, advertising, insurance, occupancy, delivery, fixed asset depreciation and other operating expenses.

General and Administrative Expenses. General and administrative expenses include all corporate overhead expenses related to our headquarters such as salaries, taxes and benefits, occupancy, administrative and other operating expenses.

Store Revenue. Total store revenue increased by $27.3$33.1 million, or 2.4%2.0%, to $1,160.8$1,725.8 million for the sixnine months ended JuneSeptember 30, 2005 as compared to $1,133.5$1,692.7 million for the sixnine months ended JuneSeptember 30, 2004. The increase in total store revenue is primarily attributable to approximately $66.9$70.5 million in incremental revenue from new stores and acquisitions, net of stores sold and the effects of merged stores, during the first sixnine months of 2005 as compared to 2004, offset by a decrease in same store sales of 4.0%2.8%.

Same store revenues represent those revenues earned in stores that were operated by us for each of the entire sixnine month periods ending JuneSeptember 30, 2005 and 2004, excluding store locations that received accounts through an acquisition or merger of an existing store location. Same store revenues decreased by $39.6$37.4 million, or 4.0%2.8%, to $947.1$1,303.2 million for the sixnine months ended JuneSeptember 30, 2005 as compared to $986.7$1,340.6 million in 2004. This decrease in same store revenues was primarily attributable to a decrease in the average number of customers and agreements on rent on a per store basis during the first sixnine months of 2005 as compared to the first sixnine months of 2004.

Franchise Revenue. Total franchise revenue decreased by $3.3$5.2 million, or 13.4%14.6%, to $21.6$30.1 million for the sixnine months ended JuneSeptember 30, 2005 as compared to $24.9$35.3 million in 2004. This decrease was primarily attributable to a decrease in merchandise sales to franchise locations as a result of 1821 fewer franchised locations, on a weighted average basis, operating in the first sixnine months of 2005 as compared to the first sixnine months of 2004. The number of locations has declined as a result of fewer new franchise stores, together with the purchase of 5153 franchise locations by other Rent-A-Center subsidiaries since JuneSeptember 30, 2004.

Cost of Rentals and Fees. Cost of rentals and fees consists of depreciation of rental merchandise and the costs associated with our membership programs, which began in 2004. Cost of rentals and fees for the sixnine months ended JuneSeptember 30, 2005 increased by $5.2$4.8 million, or 2.4%1.5%, to $226.5$338.7 million for the sixnine months ended JuneSeptember 30, 2005 as compared to $221.3$333.9 million in 2004. This increase is a result of an increase in rental revenue for the first sixnine months of 2005 compared to the first sixnine months of 2004. Cost of rentals and fees expressed as a percentage of store rentals and fees revenue increased slightly towas 21.7% in 2005 from 21.6% for the same period innine months ending September 30, 2005 and 2004.

Cost of Merchandise Sold. Cost of merchandise sold increased by $6.2$9.5 million, or 9.7%10.5%, to $70.3$100.6 million for the sixnine months ended JuneSeptember 30, 2005 as compared to $64.1$91.1 million in 2004. This increase was primarily a result of an increase in the number of items sold during the first sixnine months of 2005 as compared to the first sixnine months of 2004. The gross margin percent of merchandise sales decreased to 29.9%27.9% in 2005 from 30.9%30.1% in 2004. This decrease is attributable to a decrease in the average selling price of merchandise sold during the first nine months of 2005 as compared to 2004.

Salaries and Other Expenses. Salaries and other expenses increased by $46.9$70.8 million, or 7.6%7.5%, to $667.0$1,017.4 million for the sixnine months ended JuneSeptember 30, 2005 as compared to $620.1$946.6 million in 2004. The increase was primarily the result of an increase in salaries and wages and occupancy costs due to an increased number of stores in the 2005 period, as well as higher fuel expenses relating to product deliveries and utility costs.costs, as well as the impact of Hurricanes Katrina and Rita. For the sixnine months ended JuneSeptember 30, 2005, there were 159102 more stores, on a weighted average basis, operating during the period as compared to 2004. Salaries and other expenses expressed as a percentage of total store revenue increased to 57.5%59.0% for the sixnine months ended JuneSeptember 30, 2005 from 54.7%55.9% in 2004. This percentage increase was primarily attributable to the decrease in same store sales during the first sixnine months of 2005 as compared to 2004.

Franchise Cost of Merchandise Sold. Franchise cost of merchandise sold decreased by $3.1$4.7 million, or 14.6%15.8%, to $18.0$25.0 million for the sixnine months ended JuneSeptember 30, 2005 as compared to $21.1$29.7 million in 2004. This decrease was primarily attributable to a decrease in merchandise sales to franchise locations as a result of 1821 fewer franchised locations, on a weighted average basis, operating in the first sixnine months of 2005 as compared to the first sixnine months of 2004. The number of locations has declined as a result of fewer new franchise stores, together with the purchase of 5153 franchise locations by other Rent-A-Center subsidiaries since JuneSeptember 30, 2004.

General and Administrative Expenses. General and administrative expenses increased by $1.9$4.3 million, or 5.1%7.7%, to $39.5$60.7 million for the sixnine months ended JuneSeptember 30, 2005, as compared to $37.6$56.4 million for the first sixnine months of 2004. General and administrative expenses expressed as a percentage of total revenue increased slightly to 3.3%3.5% for the sixnine months ending JuneSeptember 30, 2005 as compared to 3.2%3.3% for the sixnine months ending JuneSeptember 30, 2004.

Operating Profit. Operating profit decreased by $23.9$17.2 million, or 13.1%8.3%, to $159.0$190.0 million for the sixnine months ended JuneSeptember 30, 2005 as compared to $182.9$207.2 million in 2004. Excluding the pre-tax litigation reversion credit of $8.0 million recorded in the first quarter of 2005, the pre-tax restructuring charge of $13.0 million recorded in the third quarter of 2005 and the pre-tax litigation charge of $47.0 million recorded in the third quarter of 2004, operating profit decreased by $32.1$59.2 million, or 17.5%23.3%, to $150.8$195.0 million for the sixnine months ended JuneSeptember 30, 2005 as compared to $182.9$254.2 million in 2004. Operating profit as a percentage of total revenue decreased to 13.0%11.1% for the sixnine months ended JuneSeptember 30, 2005 before the pre-tax litigation reversion credit and restructuring charge in 2005, from 15.8%14.7% in the first sixnine months of 2004 before the pre-tax litigation charge in 2004. These decreases were primarily attributable to the decrease in same store sales and the increase in salaries and other expenses during the first sixnine months of 2005 versus 2004 as discussed above.

Net Earnings. Net earnings decreased by $14.0$8.3 million, or 13.5%7.6%, to $89.4$100.7 million for the sixnine months ended JuneSeptember 30, 2005 as compared to $103.4$109.0 million in 2004. Excluding the pre-tax litigation reversion credit of $8.0 million recorded in the first quarter of 2005, anda pre-tax restructuring charge of $13.0 million recorded in the third quarter, a $2.0 million tax audit reserve credit recorded in the second quarter of 2005, and a $47.0 million litigation charge and $4.2 million refinance charge recorded in the third quarter of 2004, net earnings decreased by $21.1$39.1 million, or 20.4%27.7%, to $82.3$101.9 million for the sixnine months ended JuneSeptember 30, 2005 as compared to $103.4$141.0 million in 2004. This decrease was primarily attributable to the decrease in same store sales and the increase in salaries and other expenses during the first sixnine months of 2005 versus 2004 as discussed above.

Store Revenue. Total store revenue increased by $9.8$5.7 million, or 1.7%1.0%, to $571.8$564.9 million for the three months ended JuneSeptember 30, 2005 as compared to $562.0$559.2 million for the three months ended JuneSeptember 30, 2004. The increase in total store revenue is primarily attributable to approximately $22.5$7.7 million in incremental revenue from new stores and acquisitions, net of stores sold and the effects of merged stores, during the secondthird quarter of 2005 as compared to 2004, offset by a decrease in same store sales of 2.6%0.4%.

Same store revenues represent those revenues earned in stores that were operated by us for each of the entire three month periods ending JuneSeptember 30, 2005 and 2004, excluding store locations that received accounts through an acquisition or merger of an existing store location. Same store revenues decreased by $12.7$2.0 million, or 2.6%0.4%, to $476.0$465.4 million for the three months ended JuneSeptember 30, 2005 as compared to $488.7$467.4 million in 2004. This decrease in same store revenues was primarily attributable to a decrease in the average number of customers and agreements on rent on a per store basis during the secondthird quarter of 2005 as compared to the secondthird quarter of 2004.

Franchise Revenue. Total franchise revenue decreased by $2.2$1.8 million, or 19.9%17.6%, to $8.8$8.6 million for the three months ended JuneSeptember 30, 2005 as compared to $11.0$10.4 million in 2004. This decrease was primarily attributable to a decrease in merchandise sales to franchise locations as a result of 1428 fewer franchised locations, on a weighted average basis, operating in the secondthird quarter of 2005 as compared to the secondthird quarter of 2004. The number of locations has declined as a result of fewer new franchise stores, together with the purchase of 5153 franchise locations by other Rent-A-Center subsidiaries since JuneSeptember 30, 2004.

Cost of Rentals and Fees. Cost of rentals and fees consists of depreciation of rental merchandise and the costs associated with our membership programs, which began in 2004. Cost of rentals and fees for the three months ended JuneSeptember 30, 2005, increaseddecreased by $1.3 million,approximately $400,000, or 1.2%0.4%, to $114.1$112.2 million for the three months ended JuneSeptember 30, 2005 as compared to $112.7$112.6 million in 2004. This increase is a result of an increase in rental revenue for the second quarter of 2005 compared to the second quarter of 2004. Cost of rentals and fees expressed as a percentage of store rentals and fees revenue remained constant atdecreased slightly to 21.7% for the quartersquarter ending JuneSeptember 30, 2005 andas compared to 21.8% for the same period in 2004.

Cost of Merchandise Sold. Cost of merchandise sold increased by $3.5$3.3 million, or 14.2%12.4%, to $28.2$30.3 million for the three months ended JuneSeptember 30, 2005 as compared to $24.7$27.0 million in 2004. This increase was primarily a result of an increase in the number of items sold during the secondthird quarter of 2005 as compared to the secondthird quarter 2004. The gross margin percent of merchandise sales decreased to 24.7%22.7% in 2005 from 28.6%25.6% in 2004. This decrease was primarily attributable to a decrease in the average selling price of merchandise sold during the secondthird quarter of 2005 as compared to the secondthird quarter of 2004.

Salaries and Other Expenses. Salaries and other expenses increased by $21.9$24.0 million, or 7.0%7.3%, to $332.9$350.4 million for the three months ended JuneSeptember 30, 2005 as compared to $311.0$326.4 million in 2004. Salaries and other expenses expressed as a percentage of total store revenue increased to 62.0% for the three months ended September 30, 2005 from 58.4% in 2004. The increase wasincreases are primarily the result of an increase in salaries and wages and occupancy costs due to an increased number of stores in the 2005 period, as well as higher fuel expenses relatedrelating to product deliveries and utility costs.costs, as well as the impact of Hurricanes Katrina and Rita. For the three months ended JuneSeptember 30, 2005, there were 10119 more stores, on a weighted average basis, operating during the period as compared to 2004. Salaries and other expenses expressed as a percentage of total store revenue increased to 58.2% for the three months ended June 30, 2005 from 55.4% in 2004. This percentage increase was primarily attributable to the decrease in same store sales during the second quarter of 2005 as compared to 2004.

Franchise Cost of Merchandise Sold. Franchise cost of merchandise sold decreased by $2.0$1.6 million, or 22.3%18.9%, to $7.2$7.0 million for the three months ended JuneSeptember 30, 2005 as compared to $9.2$8.6 million in 2004. This decrease was primarily attributable to a decrease in merchandise sales to franchise locations as a result of 1428 fewer franchised locations, on a weighted average basis, operating in the secondthird quarter of 2005 as compared to the secondthird quarter of 2004. The number of locations has declined as a result of fewer new franchise stores, together with the purchase of 5153 franchise locations by other Rent-A-Center subsidiaries since JuneSeptember 30, 2004.

General and Administrative Expenses. General and administrative expenses increased by $0.9$2.4 million, or 4.6%12.8%, to $20.3$21.2 million for the three months ended JuneSeptember 30, 2005, as compared to $19.4$18.8 million in 2004. General and administrative expenses expressed as a percentage of total revenue increased slightly to 3.5%3.7% for the three months ending JuneSeptember 30, 2005 as compared to 3.4%3.3% for the three months ending JuneSeptember 30, 2004.

Operating Profit. Operating profit decreased by $17.2 million, or 19.1%, to $73.0 million for the three months ended June 30, 2005 as compared to $90.2$71.3 million in 2004. Operating profit as a percentage of total revenue decreased to 12.6%7.7% for the three months ended JuneSeptember 30, 2005 before the pre-tax restructuring charge in 2005, from 15.7%12.5% for the three months ended September 30, 2004 before the pre-tax litigation charge in the second quarter of 2004. These decreases were primarily attributable to the decrease in same store sales and the increase in salaries and other expenses during the secondthird quarter of 2005 versus 2004 as discussed above.

Net Earnings. Net earnings decreasedincreased by $9.5$5.7 million, or 18.5%102.4%, to $41.7$11.3 million for the three months ended JuneSeptember 30, 2005 as compared to $51.2$5.6 million in 2004. Excluding the a $2.0pre-tax restructuring charge of $13.0 million tax audit reserve credit recorded in the secondthird quarter, a pre-tax litigation charge of $47.0 million and a pre-tax refinance charge of $4.2 million, both recorded in the third quarter of 2005,2004, net earnings decreased by $11.6$16.6 million, or 22.7%44.2%, to $39.6$20.9 million for the quarterthree months ended JuneSeptember 30, 2005 as compared to $51.2$37.5 million in 2004. This decrease was primarily attributable to the decrease in same store sales and the increase in salaries and other expenses during the secondthird quarter of 2005 versus 2004 as discussed above.

Cash provided by operating activities decreased by $143.5$140.4 million to $56.2$143.7 million for the sixnine months ending JuneSeptember 30, 2005 as compared to $199.7$284.1 million in 2004. This decrease resultedis primarily from the decrease in net earnings,attributable to a decrease in our deferred income taxes related to the reversal of the cash benefit related to the Jobs and Growth Tax Relief Reconciliation Act of 2003 discussed later in this report, an increase in inventory purchases related to our increased store base and a decrease in the change in our outstandingaccrued liabilities during the first sixnine months of 2005 as compared to the first sixnine months of 2004. The decrease in our outstandingaccrued liabilities was primarily due to the payment in 2005recording of the agreed upon $38.5$47.0 millionGriegosettlement in 2004 (which was paid in 2005), and an increase of theGriego/Carrillolitigation, interest paid on our notes of $11.5approximately $14.6 million andin income tax liabilities paid of $46.4 million.in 2005 as compared to 2004.

Cash used in investing activities decreased by $137.7$135.0 million to $49.8$73.1 million during the sixnine month period ending JuneSeptember 30, 2005 as compared to $187.5$208.1 million in 2004. This decrease is primarily attributable to the larger acquisitions that occurred in the first sixnine months of 2004, such as the acquisitions of Rainbow Rentals, Inc. and Rent Rite, Inc., as compared to the acquisitions that occurred in the first sixnine months of 2005.

Cash used in financing activities decreased by $29.9$78.8 million to $40.1$76.6 million during the sixnine month period ending JuneSeptember 30, 2005 as compared to $70.0$155.4 million in 2004. This decrease is primarily a result of a reduction in our stock repurchases during the first sixnine months of 2005 as compared to the same period in 2004 offset by the repayment of $61.8 million in debt during the first six months of 2005 as compared to $2.0 million during the first six months of 2004.

Liquidity Requirements.Our primary liquidity requirements are for debt service, rental merchandise purchases, capital expenditures and our store expansion program. Our primary sources of liquidity have been cash provided by operations, borrowings and sales of debt and equity securities. In the future, we may incur additional debt, or may issue debt or equity securities to finance our operating and growth strategies. The availability and attractiveness of any outside sources of financing will depend on a number of factors, some of which relate to our financial condition and performance, and some of which are beyond our control, such as prevailing interest rates and general economic conditions. There can be no assurance that additional financing will be available, or if available, that it will be on terms we find acceptable.

We believe that the cash flow generated from operations, together with amounts available under our senior credit facilities, will be sufficient to fund our debt service requirements, rental merchandise purchases, capital expenditures and our store expansion programs into 2006. Our revolving credit facilities, as well as our $10.0 million line of credit at Intrust Bank, provide us with revolving loans in an aggregate principal amount not exceeding $260.0 million, of which $166.9$111.4 million was available at July 27,October 26, 2005. At July 27,October 26, 2005, we had approximately $44.5$46.5 million in cash. To the extent we have available cash that is not necessary for store openings or acquisitions, we intend to repurchase additional shares of our common stock as well as make additional payments to service our existing debt. While our operating cash flow has been strong and we expect this strength to continue, our liquidity could be negatively impacted if we do not remain as profitable as we expect.

Our senior credit facilities and the indenture governing our 7¹/2% notes contain certain change in control provisions. A change in control would result in an event of default under our senior credit facilities, and, pursuant to the underlying indenture, would also require us to offer to repurchase all of our 7¹/2% notes at 101% of their principal amount, plus accrued interest, if any, to the date of repurchase. Provisions of our senior credit facilities restrict the repurchase of all of our 7¹/2% notes. In the event a change in control occurs, we cannot be sure that we would have enough funds to immediately pay our accelerated senior credit facility obligations and all of the 7¹/2% notes, or that we would be able to obtain financing to do so on favorable terms, if at all.

Litigation.On April 12,June 23, 2005, we reached an agreement in principle with the settlement ofplaintiffs to resolved theBenjamin Griego, etRob Pucci, et. al. v. Rent-A-Center, Inc., et al/Arthur Carrillo, et al.andJeremy Chess et. al v. Rent-A-Center, Inc., et alet. al.litigation received final approval from the court.matters pending in state court in Multnomah County, Oregon. These matters allege violations of various provisions of Oregon state law regarding overtime, lunch and work breaks, failure to pay wages due to our Oregon employees, and various contract claims that we promised but failed to pay overtime. Under the terms of the settlement, which has now been documented and preliminarily approved by the court, we anticipate we will pay $1.75 million in cash to settle total class claims, provided that the class does not exceed 650 individuals. If the class exceeds 650 individuals, we agreed to pay the plaintiffs’ attorneys’ fees, as well as an aggregate of up to $37.5 million in cash. The settlement amount is to be distributed to theadditional $750.00 per individual class of eligible customers who entered into rental-purchase agreements with us anytime from February 1, 1999 through October 31, 2004, with Rent-A-Center being entitled to any undistributed monies in the settlement fund up to an aggregate of $8.0 million, with any additional undistributed funds being paid to non-profit organizations. As a result of the response rate to the notice of the settlement mailed to class members on February 7, 2005, the parties agreed that we could retain the $8.0 million reversion, rather than deposit it as part of the settlement fund. Accordingly, on April 22, 2005, we paid $29.5 million to fundmember over 650. To account for the settlement, as well as $9.0 million inour own attorneys’ fees, for a totalwe have accrued an aggregate of $38.5$1.9 million in cash. To account foras of September 30, 2005. We expect to pay the retention of the $8.0 million reversion we recorded an $8.0 million pre-tax credit duringentire settlement amount in the first quarter of 2005.2006, following final approval of the settlement by the court.

Additional settlements or judgments against us on our existing litigation could affect our liquidity. Please refer to “Legal Proceedings” later in this report.

Income Taxes.On March 9, 2002, President Bush signed into law the Job Creation and Worker Assistance Act of 2002, which provides for accelerated tax depreciation deductions for qualifying assets placed in service between September 11, 2001 and September 10, 2004. Under these provisions, 30 percent of the basis of qualifying property is deductible in the year the property is placed in service, with the remaining 70 percent of the basis depreciated under the normal tax depreciation rules. For assets placed in service between May 6, 2003 and December 31, 2004, the Jobs and Growth Tax Relief Reconciliation Act of 2003 increased the percent of the basis of qualifying property deductible in the year the property iswas placed in service from 30% to 50%. Accordingly, our cash flow during 2002 through 2004 benefited from having a lower current cash tax obligation, which in turn provided additional cash flows from operations. We estimate that our operating cash flow increased by approximately $106.3 million through 2004 from the accelerated tax depreciation deductions. The associated deferred tax liabilities now have begun to reverse, doing so over a three year period beginning in 2005. Approximately 75% will reverse in 2005, 20% will reverse in 2006 and the remainder will reverse in 2007. We expect to pay approximately $69.2$28.5 million in taxes during the remainder of 2005. We also expect to pay approximately $21.3 million and $5.3 million in additional cash taxes in 2006 and 2007, respectively, due to the reversal of the deferred tax liabilities discussed above.

Rental Merchandise Purchases. We purchased $345.0$486.2 million and $311.7$453.4 million of rental merchandise during the sixnine month periods ending JuneSeptember 30, 2005 and 2004, respectively.

Capital Expenditures. We make capital expenditures in order to maintain our existing operations as well as for new capital assets in new and acquired stores. We spent $23.9$41.0 million and $34.9$53.4 million on capital expenditures during the sixnine month periods ending JuneSeptember 30, 2005 and 2004, respectively, and expect to spend approximately $36.1$19.0 million for the remainder of 2005.

As of July 27,October 26, 2005, we have acquired accounts from one store, opened fivethree new stores and closed eight27 stores during the thirdfourth quarter of 2005. All ofOf the closed stores, 14 were sold and 7 were merged with existing locations.locations in connection with our store consolidation plan. Five other stores were closed as a result of Hurricane Katrina and another store, unrelated to our store closing plan, was sold. For the entire year ending December 31, 2005, we intend to add approximately 5-10% to our store base by opening approximately 60-70 new store locations as well as pursuing opportunistic acquisitions.

The profitability of our stores tends to grow at a slower rate approximately five years from the time we open or acquire them. As a result, in order for us to show improvements in our profitability, it is important for us to continue to open stores in new locations or acquire under-performing stores on favorable terms. There can be no assurance that we will be able to acquire or open new stores at the rates we expect, or at all. Additionally, we cannot assure that the stores we do acquire or open will be profitable at the same levels that our current stores are, or at all.

Events of default under our senior credit facilities include customary events, such as a cross-acceleration provision in the event that we default on other debt. In addition, an event of default under the senior credit facilities would occur if there is a change of control. This is defined to include the case where a third party becomes the beneficial owner of 35% or more of our voting stock or certain changes in our Board of Directors occurs. An event of default would also occur if one or more judgments were entered against us of $20.0 million or more and such judgments were not satisfied or bonded pending appeal within 30 days after entry.

Repurchases of Outstanding Securities.On October 24, 2003, we announced that our Board of Directors had rescinded our old common stock repurchase program and authorized a new common stock repurchase program, permitting us to purchase, from time to time, in the open market and privately negotiated transactions, up to an aggregate of $100.0 million of our common stock. Over a period of time, our Board of Directors increased the authorization for stock repurchases under our new common stock repurchase program to $300.0$400.0 million. As of JuneSeptember 30, 2005, we had purchased a total of 1,813,10012,609,900 shares of our common stock for an aggregate of $241.6$321.6 million under this common stock repurchase program, of which 167,4003,917,200 shares were repurchased in the secondthird quarter of 2005.2005 for approximately $80.0 million. Please see “Unregistered Sales of Equity Securities and Use of Proceeds” later in this report.

Economic Conditions.Although our performance has not suffered in previous economic downturns, we cannot assure you that demand for our products, particularly in higher price ranges, will not significantly decrease in the event of a prolonged recession. Temporary fluctuationsFluctuations in our targeted customers’ monthly disposable income, such as those we believe may have been caused by nationwide increases in fuel and energy costs, could adversely impact our results of operations.

As of JuneSeptember 30, 2005, we had $300.0 million in subordinated notes outstanding at a fixed interest rate of 7¹/2% and $346.5$345.6 million in term loans outstanding at interest rates indexed to the Eurodollar rate. The fair value of the subordinated notes is estimated based on discounted cash flow analysis using interest rates currently offered for loans with similar terms to borrowers of similar credit quality. The fair value of the 7¹/2% subordinated notes at JuneSeptember 30, 2005 was $300.8$287.3 million. Unlike the subordinated notes, the $346.5$345.6 million in term loans have variable interest rates indexed to current Eurodollar rates. As of JuneSeptember 30, 2005, we have not entered into any interest rate swap agreements with respect to term loans under our senior credit facilities.

Market risk is the potential change in an instrument’s value caused by fluctuations in interest rates. Our primary market risk exposure is fluctuations in interest rates. Monitoring and managing this risk is a continual process carried out by our Board of Directors and senior management. We manage our market risk based on an ongoing assessment of trends in interest rates and economic developments, giving consideration to possible effects on both total return and reported earnings.

We hold long-term debt with variable interest rates indexed to prime or the Eurodollar rate that exposes us to the risk of increased interest costs if interest rates rise.

From time to time, we, along with our subsidiaries, are party to various legal proceedings arising in the ordinary course of business. Except as described below, we are not currently a party to any material litigation. The ultimate outcome of our litigation is uncertain and the amount of any loss we may incur, if any, cannot in our judgment be reasonably estimated. Accordingly, other than with respect to the prospective settlement of thePucci/Chessmatter discussed below and anticipated legal fees and expenses for these matters, no provision has been made in our consolidated financial statements for any such loss.

Colon v. Thorn Americas, Inc.The plaintiff filed this class action in November 1997 in New York state court. This matter was assumed by us in connection with the Thorn Americas acquisition, and appropriate purchase accounting adjustments were made for such contingent liabilities. The plaintiff acknowledges that rent-to-own transactions in New York are subject to the provisions of New York’s Rental Purchase Statute but contends the Rental Purchase Statute does not provide Thorn Americas immunity from suit for other statutory violations. The plaintiff alleges Thorn Americas has a duty to disclose effective interest under New York consumer protection laws, and seeks damages and injunctive relief for Thorn Americas’ failure to do so. This suit also alleges violations relating to excessive and unconscionable pricing, late fees, harassment, undisclosed charges, and the ease of use and accuracy of its payment records. In the prayer for relief, the plaintiff requested class certification, injunctive relief requiring Thorn Americas to cease certain marketing practices and price their rental purchase contracts in certain ways, unspecified compensatory and punitive damages, rescission of the class members contracts, an order placing in trust all moneys received by Thorn Americas in connection with the rental of merchandise during the class period, treble damages, attorney’s fees, filing fees and costs of suit, pre- and post-judgment interest, and any further relief granted by the court. The plaintiff has not alleged a specific monetary amount with respect to the request for damages.

The proposed class includes all New York residents who were party to our rent-to-own contracts from November 26, 1994. In November 2000, following interlocutory appeal by both parties from the denial of cross-motions for summary judgment, we obtained a favorable ruling from the Appellate Division of the State of New York, dismissing the plaintiff’s claims based on the alleged failure to disclose an effective interest rate. The plaintiff’s other claims were not dismissed. The plaintiff moved to certify a state-wide class in December 2000. The plaintiff’s class certification motion was heard by the court on November 7, 2001 and, on September 12, 2002, the court issued an opinion denying in part and granting in part the plaintiff’s requested certification. The opinion grants certification as to all of the plaintiff’s claims except the plaintiff’s pricing claims pursuant to the Rental Purchase Statute, as to which certification was denied. The parties have differing views as to the effect of the court’s opinion, and accordingly, the court granted the parties permission to submit competing orders as to the effect of the opinion on the plaintiff’s specific claims. Both proposed orders were submitted to the court on March 27, 2003, and on May 30, 2003, the court held a hearing regarding such orders. No order has yet been entered by the court.

From June 2003 until May 2005, there was no activity in this case. On May 18, 2005, we filed a motion to dismiss the plaintiff’s claim and to decertify the class, based upon the plaintiff’s failure to schedule her claim in this matter in her earlier voluntary bankruptcy proceeding. The plaintiff filed a response, and our motion is currently pending. If the court denies our motion, and enters a final certification order, we intend to pursue an interlocutory appeal of such certification order.

We believe these claims are without merit and will continue to vigorously defend ourselves in this case. However, we cannot assure you that we will be found to have no liability in this matter.

On February 7, 2003, we, along with certain officer and director defendants, filed a motion to dismiss the matter as well as a motion to transfer venue. In addition, our outside directors named in the matter separately filed a motion to dismiss the Securities Act claims on statute of limitations grounds. On February 19, 2003, the underwriter defendants also filed a motion to dismiss the matter. The plaintiffs filed response briefs to these motions, to which we replied on May 21, 2003. A hearing was held by the court on June 26, 2003 to hear each of these motions.

On September 30, 2003, the court granted our motion to dismiss without prejudice, dismissed without prejudice the outside directors’ and underwriters’ separate motions to dismiss and denied our motion to transfer venue. In its order on the motions to dismiss, the court granted the lead plaintiffs leave to replead the case within certain parameters. On October 9, 2003, the lead plaintiffs filed a motion for reconsideration with the court with respect to the Securities Act claims, which the court subsequently denied.

On July 7, 2004, the plaintiffs again repled their claims by filing a third amended consolidated complaint, raising allegations of similar violations against the same parties generally based upon alleged facts not previously asserted. We, along with certain officer and director defendants and the underwriter defendants, filed motions to dismiss the third amended consolidated complaint on August 23, 2004. The plaintiffs filed response briefs to these motions on October 6, 2004, to which we filed a reply brief on November 18, 2004, and the other defendants filed reply briefs on November 17, 2004. A hearing on the motions was held on April 14, 2005. On July 25, 2005, the court ruled on these motions, dismissing with prejudice the claims against our outside directors as well as the underwriter defendants, but denying our motion to dismiss. In evaluating this motion to dismiss, the court was required to view the pleadings in the light most favorable to the plaintiffs and to take the plaintiffs’ allegations as true. On August 18, 2005, we filed a motion to certify the dismissal order for an interlocutory appeal, which is currently pending.

We continue to believe the plaintiffs’ claims in this matter are without merit and intend to vigorously defend ourselves as this matter progresses. However, we cannot assure you that we will be found to have no liability in this matter.

Carey Duron, et. al. v. Rent-A-Center, Inc.This matter is a putative class action filed on August 29, 2003 in the District Court of Jefferson County, Texas by Carey Duron, who alleges we violated certain provisions of the Texas Business and Commerce Code relating to late fees charged by us under our rental purchase agreements in Texas. In the complaint, Duron alleges that her contract provided for a percentage late fee greater than that permitted by Texas law, that she was charged and paid a late fee in excess of the amount permitted by Texas law and that we had a policy and practice of assessing and collecting late fees in excess of that allowed by Texas law. Duron has not alleged specific damages in the complaint, but seeks to recover actual damages, statutory damages, interest, reasonable attorney’s fees and costs of court.

When this matter was filed, we promptly investigated Duron’s allegations, including the formula we use to calculate late fees in Texas. While we do not believe the formula utilized by us during this time period violated Texas law, in late 2003, we sent written notice to approximately 29,500 of our Texas customers for whom we had records and who were potentially adversely impacted by our calculation. We also refunded approximately $37,000 in the aggregate to the customers we could locate. In taking these measures, we believe we complied with the curative measures provided for under the Texas statute. We also reprogrammed our computer system in Texas to modify the formula by which late fees are calculated.

California Attorney General Inquiry.During the second quarter of 2004, we received an inquiry from the California Attorney General regarding our business practices in California with respect to our cash prices and our membership program. We met with representatives of the Attorney General’s office during the first quarter of 2005 and provided additional information with respect to our membership program as requested. We are continuing to discuss these issues with the Attorney General’s office.

We are subject to various actions filed against us in the states of Oregon, California and Washington alleging we violated the wage and hour laws of such states. As of JuneSeptember 30, 2005, we operated 3129 stores in Oregon, 156149 stores in California and 5046 stores in Washington.

Rob Pucci, et. al. v. Rent-A-Center, Inc; Jeremy Chess et. al. v. Rent-A-Center, Inc. et. al.; Clemmons et. al. v. Rent-A-Center, Inc., et. al..On August 20, 2001, thisthe putative class actionRob Pucci, et. al. v. Rent-A-Center, Inc.was filed against us in state court in Multnomah County, Oregon alleging we violated various provisions of Oregon state law regarding overtime, lunch and work breaks, that we failed to pay all wages due to our Oregon employees, and various contract claims that we promised but failed to pay overtime. Pucci seeks to represent a class of all present and former executive assistants, inside/outside managers and account managers employed by us within the six year period prior to the filing of the complaint as to the contract claims, and three years as to the statutory claims, and seeks class certification, payments for all unpaid wages under Oregon law, statutory and civil penalties, costs and disbursements, pre- and post-judgment interest in the amount of 9% per annum and attorneys fees.

On July 25, 2002, the plaintiffs filed a motion for class certification and on July 31, 2002, we filed our motion for summary judgment. On January 15, 2003, the court orally granted our motion for summary judgment in part, ruling that the plaintiffs were prevented from recovering overtime payments at the rate of “time and a half,” but stated that the plaintiffs may recover “straight-time” to the extent plaintiffs could prove purported class members worked in excess of forty hours in a work week but were not paid for such time worked. The court denied our motion for summary judgment on the remaining claims. We strongly disagree with the court’s rulings against our positions and requested that the court grant us interlocutory appeal on those matters.

The plaintiffs subsequently filed a motion for summary judgment seeking to resolve certain factual issues related to the purported class, which was denied on July 1, 2003. On October 10, 2003, the court issued an opinion letter stating that it would certify a class and not permit an interlocutory appeal, and issued its written order to that effect on December 9, 2003. We subsequently filed a petition for a writ of mandamus with the Oregon Supreme Court, which was denied on January 24,

Chessclaims, and facilitate final approval, administration and distribution of the proposed settlement. The settlement throughhas been documented and preliminarily approved by the federal court inPucci/Chess. andClemmonscourts.

The terms of the prospective settlement are subject to obtaining final approval from thePucci/ChessandClemmonscourts. Notice of the parties entering into a definitive settlement agreementis expected to be mailed to class members on or about November 15, 2005. Objections to the settlement are due on December 15, 2005, and obtaining court approval.the final approval hearing is scheduled for January 20, 2006. We expect to fund the entire settlement amount within 14 days following final approval by theClemmonscourt. While we believe that the terms of this prospective settlement are fair, there can be no assurance that the settlement, if completed, will be approved by the court in its present form. To account for the prospective settlement, as well as our own attorneys’ fees, we have accrued an aggregate of $1.9 million as of JuneSeptember 30, 2005.

Jeremy Burdusis, et al. v. Rent-A-Center, Inc., et al./Israel French, et al. v. Rent-A-Center, Inc. These matters pending in Los Angeles, California were filed on October 23, 2001, and October 30, 2001, respectively, and allege similar violations of the wage and hour laws of California as those inPucci. The same law firm seeking to represent the purported class inPucciis seeking to represent the purported class inBurdusis. TheBurdusisandFrenchproceedings are pending before the same judge in California. On March 24, 2003, theBurdusiscourt denied the plaintiffs’ motion for class certification in that case, which we view as a favorable development in that proceeding. On April 25, 2003, the plaintiffs inBurdusisfiled a notice of appeal of that ruling, and on May 8, 2003, theBurdusiscourt, at our request, stayed further proceedings inBurdusisandFrench pending the resolution on appeal of the court’s denial of class certification inBurdusis. In June 2004, theBurdusisplaintiffs filed their appellate brief. Our response brief was filed in September 2004, and theBurdusisplaintiffs filed their reply in October 2004. On February 9, 2005, the California Court of Appeals reversed and remanded the trial court’s denial of class certification inBurdusisand directed the trial court to reconsider its ruling in light of two other recent appellate court decisions, including the opinions of the California Supreme Court inSav-On Drugs Stores, Inc. v. Superior Court, and of the California appeals court inBell v. Farmers Insurance Exchange. After remand, the plaintiffs filed a motion with the trial court seeking to remove from the case the trial court judge who previously denied their motion for class certification. The trial court denied the motion. In response, plaintiffs’ filed a petition for writ of mandate with the California Court of Appeals requesting review of the trial court’s decision. The California Court of Appeals is scheduled to hearheard oral arguments in this matter on August 29, 2005.2005, and ruled against the plaintiffs, denying the requested relief. The case is now being returned to the trial court as previously ordered.

On October 30, 2003, the plaintiffs’ counsel inBurdusisandFrenchfiled a new non-class lawsuit in Orange County, California entitledKris Corso, et al. v. Rent-A-Center, Inc. The plaintiffs’ counsel later amended this complaint to add additional plaintiffs, totaling approximately 339 individuals. The claims made are substantially the same as those inBurdusis. On January 16, 2004, we filed a demurrer to the complaint, arguing, among other things, that the plaintiffs inCorsowere misjoined. On February 19, 2004, the court granted our demurrer on the misjoinder argument, with leave for the plaintiffs to replead. On March 8, 2004, the plaintiffs filed an amended complaint inCorso, increasing the number of plaintiffs to approximately 400. The claims in the amended complaint are substantially the same as those inBurdusis. We filed a demurrer with respect to the amended complaint on April 12, 2004, which the court granted on May 6, 2004. However, the court allowed the plaintiffs to again replead the action on a representative basis, which they did on May 26, 2004. We subsequently filed a demurrer with respect to the newly repled action, which the court granted on August 12, 2004. The court subsequently stayed theCorsomatter pending the outcome of theBurdusismatter. On March 16, 2005, the court lifted the stay and on April 12, 2005, we answered the amended complaint. Discovery is now proceeding.

to the claims made in 12 counties. Ten of these county-wide claims are now proceeding as putative county-wide class actions and two are proceeding on an individual plaintiff basis. Certain plaintiffs have appealed some of the orders granting summary judgment. The plaintiffs in eight of the 12 counties have filed motions to certify a county-wide class. We intend to vigorously oppose class certification.

We also filed motions to compel arbitration with respect to 20 individual purported plaintiffs and class representatives in 10 counties. All 20counties, all of these motions to compel arbitration have beenwhich were subsequently granted. Certain plaintiffs have appealed one of these orders compelling arbitration. The 20 arbitration plaintiffs filed separate putative nationwide class arbitration demands. In response, we filed motions to clarify the respective county courts’ orders compelling arbitration. Specifically, we asked each county court that previously struck all class allegations to make clear that the arbitration plaintiffs in those counties could not pursue any class claims, and we asked each county court in those counties that allowed plaintiffs to plead putative county-wide class claims, to make clear that such plaintiffs could only pursue county-wide claims. The threeThree courts that granted our motions to compel arbitration and had previously struck all class allegations granted our motions and ruled that the plaintiffs could not pursue any class arbitration claims. Five courts ruled that the arbitration plaintiffs could only pursue county-wide class arbitration claims, and two of the county courts refused to limit the arbitration plaintiffs’ ability to pursue class arbitration demands. We intend to vigorously oppose these class arbitration demands, including vigorously challenging the ability of the plaintiffs to pursue in arbitration, on a putative nation-wide class basis, claims which were previously premised on purported violations of Washington state law.

Although the wage and hour laws and class certification procedures of Oregon, California and Washington contain certain differences that could cause differences in the outcome of the pending litigation in these states, we believe the claims of the purported classes involved in each are without merit and we intend to vigorously oppose each of these cases. We cannot assure you, however, that we will be found to have no liability in these matters.