(Operator Instructions) Your speakers today are Mr. Mark Speese, Chairman and Chief Executive Officer of Rent-A-Center; Mr. Mitch Fadel, President and CFO; Mr. Robert Davis, CFO; and Mr. David Carpenter, Vice President of Investor Relations. I would now like to turn the conference over to Mr. Carpenter. Please go ahead, sir.

Thank you. Good morning everyone, and thank you for joining us. You should have received a copy of the earnings release distributed after the market closed yesterday. It outlines our operational and financial results that were made in the first quarter. If for some reason you did not receive a copy of the release you can download it from our website at investor.rentacenter.com. In addition, certain financial and statistical information that will be discussed during the conference call will also be provided on the same web site. Also, in accordance with SEC rules concerning non-GAAP financial measures, the reconciliation of EBITDA is provided in our earnings press release under the Statement of Earnings Highlight. Finally I must remind you that some of the statements made in this call, such as forecast growth and revenues, earnings, operating margins, cash flow, and profitability or other business or trade information are forward-looking statements. These matters are of course subject to many factors that could cause actual results to differ materially from out expectations reflected in the forward-looking statement. These factors are described in the earnings release issued yesterday as well as our most recent annual report on form 10K for the year ended December 31st, 2007. Rent-A-Center undertakes no obligation to publicly update or revise any forward-looking statements. I would now like to turn the conference call over to Mitch. Mitch?

Thanks, David. Good morning, everyone and thanks for joining us on our first quarter earnings call. As you can see in the press release, total revenue, same store sales, and both reported and adjusted diluted earnings per share exceeded our guidance. A very good quarter for us, including the 2.8% same-store sales which was primarily the result of higher merchandise sales revenue as more customers than we anticipated exercised their purchase option in the first quarter. These extra sales as well as getting some of the benefits from out store consolidation plan earlier than expected drove our revenue and our earnings above our guidance. Traffic was ok for the quarter as we continue with our Worry-Free Guarantee advertising campaign. Collections continue to improve. Our average weekly delinquency number on customers one or more days past due was right at our goal of 5.9%, down 46 bases points from the last quarter, and 17 bases points better when compared to the first quarter of 2007. Very good results there and they are translating to better results in the loss line. In fact our customer s skips and stones as a percent of revenue were 2.6% down 20 bases points from last quarter and down 60 bases points from our high level last summer. Our inventory held for rent metric came down nicely to 20.9%, a 70 bases point drop from the fourth quarter and comfortably within our range of 20-24%. The store consolidation plan that we announced in early December is substantially complete, and as I mentioned earlier we’ve recognized some of the expense synergies from that plan earlier than expected, and we are on track for the monthly $2-2.5 Million from that initiative from that quarter. With regard to the economic stimulus act, where the additional tax refunds start this week, in fact they started yesterday and run through mid-July; we’ve developed a well though out plan to benefit from the tax refunds through additional advertising and additional operational efforts. So we are pretty comfortable with our plan there. In summary, the quarter was a very good one for us, as we continue to focus on driving traffic through our various advertising and marketing initiative, continuing to control our delinquencies, our losses, and our inventory levels. I would like to thank our 20,000 co-workers for their execution of that plan, and for their continued commitment to our success. Robert?

Thank you, Mitch. I want to spend a few minutes updating you on some of our financial highlights during the quarter, and then I’ll turn the call over to Mark. I would like to mention that much of the information I provide, whether it is historical results or forecast results will be presented in a recurring and comparable basis. As outlined in the press release, total revenues increased during the first quarter of 2008 to $756.6 Million. Supported by a positive same-store sales comp of 2.8% that Mitch just spoke to. Adjusted net earnings and diluted earnings per share were $38.2 Million and $.57 respectively and exceeded our guidance range for the quarter of $.47-.53. As reflected in the press release, our reported GAAP earnings for the quarter were impacted negatively by approximately $.03, or $2.9 Million as a result of finalizing the previously announced restructuring plan, the benefits of which include approximately $2-2.5 Million in incremental monthly operating profits. And as Mitch alluded to, we do believe that our ability to move with appropriate level of speed and diligence in executing our restructuring plan has enabled us to capture some of the benefits much sooner than originally anticipated. And as such, is reflected in our first quarter results as well as our forward guidance for the balance of the year. Our first quarter EBITDA came in around $103.6 Million and a margin of 13.7%. Of the 220 bases point increase from the fourth quarter of 2007, our operating cash flow has remained very strong, and was over $128 Million in the first quarter. As a result, as of March 31st, we were able to reduce our outstanding indebtedness since year end by over $134 Million. Leverage at year end equated at 2.84 times, down from 3.08 times, for a…

Thank you Robert and Mitch. Good morning everyone. As you have just heard and read, all in all I would say a pretty good quarter for us. I must say I am not only pleased with the overall performance but in particular some of the operational improvements that Mitch mentioned. Our weekly delinquencies and customer losses returning to historical levels, the inventory held for rent as well as the overall mix of inventory in good shape- and certainly the store consolidations and our ability to realize the expected synergies from that plan. Not only a good quarter from a top and bottom line perspective, but as Robert also mentioned, a very strong quarter for cash flow which allowed us to further strengthen our balance sheet. Let me add, I am very comfortable with where we are in terms of our capital structure, be it our current debt levels, our leverage ratios, our future needs, and so forth. With regard to the financial service business, as we discussed in our last call, we were addressing some back office issues. Essentially, the build-out of automation to give us a scalable platform that would allow us to efficiently and cost-effectively reach mass. We have med significant progress to date, having completed several of the identified initiatives, and are in the testing state of the remaining enhancements. Our current expectation is to have all systems in place by the end of May or early June. Now that said, we are opening a couple of dozen locations as we speak. We will use these stores as a test for the system enhancements. Expecting no significant issues, we will begin accelerated openings in July, expecting to add approximately 150 locations for the year. I will also add that the operating results of those in place continue to improve, and give us further comfort in our ability to execute the business model as well as support the need for those services. In summary, it was a good start to the year. We have and continue to make improvements to many aspects of our business. At the same time we are very mindful of the macroeconomic environment in which we live and work, and remain focused on those things within our control. The customer experience, the value proposition, our collections and inventory, maintaining a solid balance sheet, and managing our resources wisely. We appreciate your support, and with that update we would like to open the call up for questions.

Your first question is from Dennis Telzrow of Stephens, Inc.

Mark, I guess the guidance on same-store for the second quarter is driven by more your thoughts about what merchandise sales will be, given you had such a robust first quarter. I guess I am a little “scratching-my-head” with the second stimulus package thinking it might give you a little more “humph” in the merchandise sales. Any thoughts there?

The first quarter, Dennis you’re right. It was enhanced quite a bit by the accelerated number of sales and EPOs in the first quarter that rolled the comp to the level that it was. As you know, recurring revenue associated with those agreements is gone, you have to replace those, so there is the fall-off of the pay-outs that we experienced in the first quarter. We are expecting some benefit, if you will, from the pay-outs that may come in the second quarter. I don’t expect it to be near at the level that we saw in the first, quite frankly. And it’s really hard to estimate. There’s a lot of the commentary today, what you are hearing from the consumers is that they’ll use that money more often than not to buy essentials or pay off current debt. Does our agreement fall under that? That is hard to estimate. So we have a little bit of an uptick expected in our sales, but certainly not at the level that we saw in the first quarter.

I would agree with you Mark. It is a little bit of an unknown, Dennis because we know what to expect in the first quarter, because we have that every year. This year was a little higher than we expected. That helped drive the comp above our guidance, it was above 1%. But it’s just more of an unknown, so if it brings a lot more sales than we think than revenue will be higher than what we think, but what we really want to stay focused on is to make sure that we convert the ones that we haven’t converted yet from the first quarter as well as convert those who do come in and pay off. That’s what we are focusing on aside from the advertising and operational standpoint, and it’s more of an unknown. We’ve got a little uptick, but if it’s anything like the first quarter then we’ll have more revenue than what we’re anticipating.

Long term you hope its not an abnormal amount of payouts or to the extent that it is you obviously want to be able to re-rent to them or get them into a new agreement so you have that new annuity in the forward months or quarters.

Any particular geographic disparity given the disparage we see in various states, Florida, California?

They all vary a little bit, but I wouldn’t say materially. There’s discussion about Florida, in our case, last quarter and one of the others. Florida is a little behind, but not to the extent that the others mentioned in terms of the overall. I wouldn’t say that there is any state that is materially different than what we’ve been seeing or what our expectation was.

There certainly are variances but nothing that really is affecting more than others.

Ok, thank you very much.

Your next question is from Arvind Bhatia with Sterne Agee. Arvind Bhatia- Sterne, Agee & Leach: Good quarter. My first question is, am I reading this right that your free cash flow guidance has now gone up from what it was before, and I say that as I am looking at your most recent discussion on that topic and I’m adding that bonus appreciation mentioned in your 10K. It looks like your free cash flow guidance is now higher than what it was before. Robert, is that accurate in the context of what you guys reported?

Yeah, Arvind. The free cash flow I mentioned in the opening statement of $230-250 Million does include the benefit associated with the tax law that was signed into place during the first quarter of 2008. We anticipate not being a cash taxpayer this year, so that’s kind of a one-time benefit, temporary benefit this year. Obviously that’s a deferred item that we will end up paying in forward years. But for this year we will have about a $65-70 Million benefit associated with that. Arvind Bhatia- Sterne, Agee & Leach: OK. Was there any difference in the bad debt rate in the financial services business? Did you see any kind of stable environment there? I know one player in that space recently came out and indicated there was some deterioration. I wonder what your experience was in that?

The first quarter was good from a delinquency standpoint both on the RTO side and the financial services came down. And you would expect that in the first quarter. I don’t know the details- I heard a little bit about what you are talking about but I don’t know the details. In our case, you would expect the first quarter to be better with the income tax money on the street, and it was. Down in the 15% range and in some months even lower than that, but in the ball park of 15%, where our goal is to be under 20%. During the course of the year you would expect the first quarter to be lower and it turns out it was. That has been brought under control and we are very pleased with our first quarter results from a delinquency standpoint, on the RTO side and the financial services side. We don’t see any problem with that.

In losses too, Mitch, not just delinquencies. Arvind Bhatia- Sterne, Agee & Leach: And the gasoline prices are obviously a headwind for everybody, but what are you assuming in your thinking for the year with the trends in gasoline prices? We go to $4 a gallon and stay there, or what’s based into your thinking?

From a model perspective we are assuming essentially going to the $4. There have been all kinds of talk about that. We know that we’re at $3.60 or $3.70 today, and we have assumed an increase driven by everything that is being said. Hopefully it doesn’t go any higher than that. The assumption from an expense standpoint as well as how you think on pressure on the business for lack of a better word. We have that thinking we believe correctly embedded in our assumptions.

That is really true past the summer, into the end of the year. Most of the time prices do go down in the fall, but we have that. If it stays there, anything that comes down at that point will be to our benefit.

The cost part is much easier to capture than assumptions embedded in there in terms of what overall impact it may have on the consumer end over demand obviously is a little bit harder to theorize. We’ve got our best shot at it.. Arvind Bhatia- Sterne, Agee & Leach: The store consolidation that you have picked up about $2-2.5 Million in operating profits a month. Sequentially that would be $.06-.07. But you are saying that you started to get some benefit in the first quarter, so you did start to get some benefit in the March timeframe, is that the way to read it?

If you look at the guidance that we gave in the fourth quarter relative to margins on salaries and other line compared to overall revenue, we were somewhat better than that, and that is due to the fact that we were able to get some of those things much quicker than expected. It probably came late February, but then all of March we had a few stores that were still working through in the first quarter and making sure that we were able to move quickly and with the right amount of diligence to get that wrapped up as soon as we could. Arvind Bhatia- Sterne, Agee & Leach: A penny or two maybe, in the March quarter ,of benefit for that?

$.02 to $.03 maybe in the first quarter. Arvind Bhatia- Sterne, Agee & Leach: So there is nothing else in the second quarter from a seasonality or calendar standpoint that is anything unusual? We talked about the merchandise sales and how that is not predictable, but outside of that, there is nothing else that is different?

I think it is just a follow on point. I think you understand, but the benefits we received in the first quarter relative to the consolidation plan obviously came a little quicker. I will remind everyone that we expected to realize all of that the second quarter forward. Those were already embedded in our guidance, we just got a little bit on the front end. It doesn’t change what we expect now going forward. Arvind Bhatia- Sterne, Agee & Leach: Last question. Is there a way to think about the first quarter without the benefit of merchandise sales? Meaning, if the merchandise sales came in on plan, what would the comp number have been in that situation?

The overall comp of 2.8%, about half of that came from merchandise sales. About 1.3-1.4%. When you think about the way we spoke to the sales and the consolidation plan driving the results higher than expected, we’re really referring to the merchandise sales driving the comp and the consolidation plan helping drive the earnings a little bit. If you look at the margin on the merchandise sales in the first quarter, gross profit dollars – the margin was not as good as we would have expected. If you look back at the first quarter I think we made about $22 Million in gross profit. If you compare that to the first quarter of 2007 that was a similar number. The extra merchandise sales really didn’t drive the profit as much as it drove the comp.

And the comp would have been in that 1.3 range anyhow, and our guidance was flat to 1%. So it would have been on the high end, so if you think about that translating to high end of earnings in the $.53-$.54 range, and then the $.02-$.03 on the expense side, that Robert talked about. And then you are up to that $.57. Arvind Bhatia- Sterne, Agee & Leach: I think that is why people are wondering about the second quarter because even without the merchandise sales benefit, why would your trend be any different in the second quarter? Your comparison is very similar in the second quarter and we are all just trying to understand if you are just being conservative, or is there anything else? It doesn’t sound like there is anything more.

I would say two things. We’re not sure what the impact of the stimulus package tax returns are. That’s kind of an unknown. But that extra pay-off going from that comp 1.3-1.4% range to 2.8%, that takes some recurring revenue out of the next quarter when they pay out their agreement, and we’ve got to convert those customers. And we do convert as you know from our K we have about 75% repeat business, so we do convert, it just doesn’t always happen day one. We’ve got to get those people back on rent so the extra pay-off in terms of revenue in the first quarter actually takes some of the recurring revenue out of the second quarter. Arvind Bhatia- Sterne, Agee & Leach: You are doing some special advertising promotions as you have pointed out, to convert many of those customers back on rent? Thanks guys. Good luck.

Your next question is from John Baugh with Stifel Nicolaus. John Baugh- Stifel Nicolaus & Company, Inc.: First question is can you quantify what the experience of early pay-out was in the first quarter year-over-year?

The additional pay-out is about half of the comp difference. The 2.8% as Robert just said, about half of that was driven by the extra sales, so ½% on our comp stores, or overall, would be the increase on the sales. Are you talking about dollars, John? John Baugh- Stifel Nicolaus & Company, Inc.: Yes, I’m just trying to get a feel for the dollar amount, year-over-year in the first quarter of early payouts, and then maybe some color on why that occurred? If you could guess.

If you look at the earnings statement on the last page of the press release the sales were $85 Million versus last year $68 Million. So there is a $17 Million increase in sales. That’s about 25% more, and I think that translates to the numbers of pay-outs were a little less than that. The dollars would be about 25% higher.

There are also sales off the showroom floors built into there so our pay-outs ran about 15% higher than the year before, and then the dollars as you can see when you add sales off the showroom floor, run about 25% higher.

The sales off the showroom floor may be a little bit on the early purchase options. We had a lot of inventory. We did get backed up on inventory last year in the RentWay product and the bad summer that we had. We got backed up, with the consolidation plan, we closed almost 300 stores. We had a lot of product to move, and we moved it. If you look at inventory held for rent it has come down every summer and it’s really, really in good shape now at 20.9%. That’s our lowest number looking back over six or seven quarters. So we have a lot of inventory, so we probably drove some of that John by moving out that inventory. Why the consumer might have acted a little differently and paid out more I don’t know if there tax returns were higher than the past years or the same, but I think a lot of it would be us getting that inventory held for rent number down. John Baugh- Stifel Nicolaus & Company, Inc.: And would that explain the margin on the merchandise sales being so low, and how would I think about that in Q2-4?

It absolutely would explain the gross margin numbers you are seeing and we’ve worked hard to get that inventory in line, and we believe that from a margin standpoint we’ve hit the high-water mark. The lowest we have seen that margin and it will start to come back as we get our inventory in line as we go through the rest of the year. John Baugh- Stifel Nicolaus & Company, Inc.: Is there a target debt to cap or debt to EBITDA level that you want to get to this year given all your free cash flow? What is the general game plan?

Consistent with prior years, our target is that we are very comfortable around 2 times leverage ratio. We’re at 2.84 but Mark alluded to in his opening comments that he is very comfortable now. Long term we were at two turns a couple of years ago, and we’ll just remind you that the cash that we paid down in the first quarter was primarily revolver and we drew on that in the fourth quarter to pay on the Perez litigations. A lot of that debt reduction in the first quarter was just getting back to where we were before we had to fund that settlement. John Baugh- Stifel Nicolaus & Company, Inc.: Have the litigation settlements now on a cash basis been paid out, or is there any additional in Q2-4?

I would say there is probably about $10 Million roughly of additional cash that is expected to be paid out for litigation. As you recall, the California AG has already been accrued for and provided for in the balance sheet, it has not been funded yet. The Johnson Schaeffer Schneider case has been accrued for and provided on the balance sheet but has not been paid yet. Those combined is roughly $20 Million. We do anticipate getting approximately $8 Million back in the Perez version. That has not come back in yet, so net-net may be another $10-12 Million of cash this year. That really cleans up a lot of the litigation that we had out there in prior years. We feel really good about our litigation profile and where we are right now. John Baugh- Stifel Nicolaus & Company, Inc.: And lastly, the restructuring charge in the first quarter- did that come as a surprise to you, and I’m trying to relate that to your guidance? And then, do you expect any lingering charges in Q2 and beyond?

No that doesn’t surprise us from an accounting stand point we can only accrue for stores that are actually closed in the period. And we accrued the majority of that in the fourth quarter. But there were a few stores that were still hanging out in the first quarter that we had to wait for those stores to close, and get the inventory out, then accrue for the leases. We don’t anticipate any lingering charges in Q2 going forward but what we saw in the first quarter was expected. John Baugh- Stifel Nicolaus & Company, Inc.: So you’ve got all the stores closed, more or less now, and lastly a franchise store count total.

I think there is one more to do this quarter and maybe one more in the plan. That will be later in the year as leases get worked out, but there are one or two more John Baugh- Stifel Nicolaus & Company, Inc.: Great, and what’s the franchise store count?

It didn’t change much in the first quarter . It’s about 2.14%

Your next question is from Henry Coffey with Ferris, Baker Watts.

I hate to ask such an obvious question, but given that you’re pretty much into the first month of the first quarter, how solid are you on that $.57 and how would you gain the system in terms of trying to guess what the upside would be if the $600 rebates translate into more sales, and if your payday loan business performs a little better than you thought?

I would say our guidance is what we expect. Better performance out of the income tax checks, not only if more of them get cashed in our stores as well as more revenue from the pay-outs. The key to the whole year would be how many we can convert. Of course if the payday loan business is better than we forecast then we’ll do better than we forecast. But certainly we feel that this is down the middle of the fairway guidance and there is always upside and just if gas prices were $10 gallon there would be downside.

How is the payday loan business performing now that you’ve got your arms around everything?

Improving every month. And our folks are doing a great job on getting these scalable systems ready to go so we can really start putting in the stores every month, starting in July as Mark had mentioned. And the little bit of a slow-down giving the operations side of that business time before we really start to open a lot more stores we’re really starting to see that in the delinquency numbers and staffing and those kinds of things. I think it has been a blessing in disguise that we’ve slowed down in a lot of ways.

I would agree with you. When do we start seeing separate revenue numbers out of that business? So we can get a sense of exactly what it’s contributing?

We will at some point in the future want to do that from a desire standpoint. We are not required to do so according to SEC rules and accounting rules at this point, until it becomes 10% more of your business, be it assets, sales, or income. I think it is fair to say that at some point in the future as we ramp up these stores we will want to provide more and break out more information for you, and provide more color either on conference call or on K’s and Q’s.

Thank you.

Your next question is from Emily Shay with Lehman brothers.

I just had a couple of follow-up questions for the financial services business. I wanted to see if you had a breakout of what percent of that business right not is coming from social security checks?

I’m not sure I understood the question. What percent of the business is…

Meaning, do you have people utilizing their social security checks to come in and rent items from you?

OH, the rent –to-own business? Not much, I don’t think we can quantify it.

The demographic is a younger demographic than traditional social security, although you might have some people on social security maybe from a disability standpoint. There might be a few of those but it would be a real small part of the business.

Most of our customers are working individuals.

Ok, so on the payday lending side you don’t see people coming in and trying to cash their social security checks with you then?

Very rare.

OK. And then, I’m sure you probably saw Wal-Mart coming out and saying they were going to cash the rebate checks that were coming in and require no purchase at the store. What are you doing in terms of that, cashing rebate checks?

In the 280 stores where we have the financial services we’re advertising in those local communities that we are there to cash the checks, because they have the cash to do it. The typical rent-to-own store without the Cash Advantage program in it and the security systems that are in the Cash Advantage stores they don’t have the cash or the means to secure enough cash to have that much for check cashing so we would be doing that but only in the stores where we’ve got the Cash Advantage kiosks.

And then if I could have one final question. Have you been contemplating re-purchasing your bonds at all?

Those don’t mature until 2010. As always we evaluate our entire capital structure and think about ways to deploy our cash. As you may read in our Ks and Qs we leave it open to management discretion whether its opportunistic share repurchase, debt reduction, repurchase of our subordinating notes, so forth. All options are on the table and we’ll evaluate it as we move forward.

OK. Thank you.

Your next question is from Carla Casella with JP Morgan.

Any changes in delinquency rates or change in delinquencies?

They have actually improved. Mitch mentioned the weekly delinquency in the first quarter was at our stated goal of 5.9%, which was actually below both the fourth quarter as well as last year. Customer losses continued to improve, they were 2.6% in the first quarter, which was down 20 bases points from the fourth, and 60 bases points from last summer high. The losses as you may recall we typically like to see at 2.5% or under, so maybe slightly above but it is trending the right way. We feel real good with it.

The loan business really had a good quarter on delinquency in the first quarter as well as …

And on the rebate checks, did you talk about what your past experience has been with how much of that goes into pre-payment on merchandise, or new customers coming in? Have you been able to track it at all when there have been past rebates?

We know what to expect in the first quarter. It does increase our sales and our purchase options go up it’s also a good time to rent, too. Consumer confidence is higher when they have more money in their pocket. As far as it being in the second quarter, the May through July, we don’t have much experience with that. There was a somewhat similar package back in 2003, that’s been five years. We’re not positive what to expect this quarter because this is more of a one-time event. But we are ready to convert those customers, as well as doing some extra advertising if they do pay off their unit. As well as just getting new customers into the store, from an advertising and operational initiative standpoint. A little bit of an unknown, unlike how we know what to expect in the first quarter of the year.

What percentage of your merchandise now are flat-screen TVs?

I don’t have that in front of me. The electronics percentages are going up. We were around 40-41% of our business a few years ago in electronics. It went down into the 32-33% range, and now it has come back up to 34%. That is largely due to the flat-panel TVs. Electronics are coming back, gone up largely driven by the flat-panel TVs and we continue that. I don’t have specific numbers.

I don’t know Carla if part of your question is “what percentage of your TVs are flat panel”, if you are talking about what is in the inventory. Essentially everything we are ordering today is the flat panel technology.

Oh it is. OK.

And the vast majority of the inventory in the system falls within the flat panel, but it is fair to say that we have inventory in the system from maybe a year or so ago, because the average product is in the system two years, so there may be some of that older. But 98% of that is already under agreement. But anything that we are buying is certainly all the new technology.

Very little old technology remaining in stock.

Are any of your stores renting game boxes? Like Play stations, or the Wii?

Yes, we have been in that for a number of years with the X-Box and the Play station 3. The most popular one right now is the Wii. They’re a little hard to get. If we could get more every month we would be happier. We rent what we can get, and hopefully as we get closer into the fall and Christmas the availability of those will free up a little more. But there is a fierce demand in the rental business for those as well.

Great. Thank you.

Your next question is from Joel Havard with Hilliard Lyons.

The employee numbers, just looking at the “K”, looks like it is going up despite the store count going down with the consolidation. Is that a function of the financial services desks that are going into these few hundred stores yet? Or is there a mixed shift between full time and part time? How would that work?

It’s partially adding the financial services and the source, but also in the K, those numbers when we announced the consolidation plan last December, one of the regions we said that the synergies wouldn’t start until the second quarter is that we didn’t lay anyone off when we closed those stores. We combined the staffs because we kept the accounts, which left us with more people than we needed. We let attrition handle that fall-off so that will come down over the course of 2008, rather than a one-time layoff of a whole bunch of people in 2007. We didn’t lay anyone off, but through attrition we won’t hire as many in those markets where we closed stores, going forward you will see those numbers coming down more in the first quarter and the second quarter.

So the trend is getting back closer to about 5 folks on an average store?

That is correct.

Ok, and you’re probably closer to 6 at year end. And again no shift in the way you’re staffing between full time and part time? There’s no plan under way there particularly?

Essentially we don’t have any part-time employees.

Good. Coming back to the financial services, should we think about that in terms of line one, or maybe like two or three full time equivalents per store to man that for the proper number of hours?

It’s between one and two, the average is probably close to two, because as we open those we add two employees to the stores. As they level off in revenue, in many cases one employee will be able to do it. It will average somewhere between one and two when it all levels out. Really more like between 1.5 and 2 is what the average would be.

To circle back to where we started from, do you think that by year-end 2008 you will be back to where you were historically on a store-staffing basis?

I would say probably before that. Relative to consolidation plan, probably by the middle of summer it will be level to where we were on a per-store basis.

That’s a lot of attrition. Is there something encouraging these folks to leave, or is there just not enough opportunity to go around on the sales floor, or how does that work?

It’s retail, and our turnover has been in that 60% range, its gotten better in the last few years but it has been in the 60% range. With that kind of turnover and multiple numbers of stores in the town, where if we close one store in Dallas and there are all these other stores, you only need to have a little bit of attrition to get back down to that level.

That makes sense. Great. Good luck.

Your next call comes from the line of Simeon Wallis with Evercore Asset Management.

Can you break out, or have you broken out financial services expense in the latest quarter?

No, we haven’t reported those numbers separate. We will be at some point as we get more material, but at this point we don’t report the revenue or the expenses separately.

So if I am looking at your income statement, where would you recognize it currently?

The revenue is imbedded in the “other” line. And then the cost is in the “salaries and other” line.

Addressing what the caller before asked, your average stores are down about 9% for the year and at the same time the store salaries are roughly flat. Is the difference there entirely due to the financial services initiative or have you just not been aggressive enough in consolidating the stores employees?

If you look at the “salaries and other” line it is down about $7 Million from the fourth quarter of last year. Normally the first quarter is higher due to payroll taxes and so forth.

I was looking at it year-over-year as I was looking at the first quarter of last year.

It is down $3 Million from the first quarter of last year and we’ve added 100 or so Financial Services stores last year. The consolidations that took place as Mitch mentioned, the attrition and the costs associated with that we really aren’t starting to realize or benefit from until the second quarter going forward.

So would you assume then that in the second quarter we should probably see that more in line with decline of the number of stores year-over-year?

You have inflation that you have to include in the “salary and other”. That includes obviously salary, but then all the other line items and fuel is one example of that. Even if you just think of 1-1.5% increase in cost of doing business. Yes, we would expect that to come down a little further. I am not sure it will equate to your store analysis. If you have 7% fewer stores, you can’t assume it will be 7% less expense. You have to add the cost of Cash Advantage going in, you’ve got inflationary growth, etc.

Our guidance right now assumes that salaries and other line will be less each quarter, 2nd, 3rd, 4th relative to what the first quarter came in at. In picking up the additional synergies going forward that we talked about, we’ve got a portion of that the first quarter. We expect the full amount of $2-2.5 Million going forward. So “salaries and other” the highest it will be will be the first quarter of this year, even though we are adding Financial Services.

So on an absolute basis the first quarter is the highest, you’re saying?

That’s correct.

Then how come on the G&A line you really didn’t see any change? [inaudible]

Well the G&A line, we’re talking about the corporate office and senior management in the field, the Senior Vice Presidents, Regional Managers and so forth, there really wasn’t a lot of change there related to store consolidation plan, but coupled with that is the changes in investments that we’re making in technology to put the back office platform and allow us to grow more efficiently.

Also Robert on a year-over-year basis there is no change, but sequentially from the fourth quarter we went down from 4.3% to 4.1%, so it went up last year as we put in the systems for Cash Advantage, and so forth, and it went back down in the first quarter after the consolidation program. So year-over-year is the same which for the gear-up on Cash Advantage is pretty good, and we’re able to keep year-over-year the same because some expense on the consolidation program offsetting the growth in Cash Advantage.

The next question is from Mike Smith with Kansas City Capital

When you decided to look at the cash business, the Financial Services business, what kind of internal rate of return did you calculate your return on investment target to be.

It’s roughly 75% ROI. That assumes that we are doing $20-25,000 in revenue, with about 40% flow-through. We are leveraging our square footage and so the additional occupancy costs we are not having to expend that capital for that purpose. So really you are talking about a couple of employees and losses are really the cost-drivers in that business. But otherwise a 40% flow-through on that kind of revenue with an original CapEx investment of roughly $50-60,000 generates 70-75% ROI.

In that figure what are you guessing your losses will be?

20-22%.

That’s a little bit lower than the industry, isn’t it?

Yes it is.

The other question I have is, I wonder if you can add some color to your marketing program, whether that is going to be directed more toward the rental side of your business, or more towards the sales side of your business as you try to garner your part of the rebate checks?

Certainly the rental side. We have some targeted mail that goes to consumers that are more apt to pay out using those checks. That would drive the sale. But our marketing to them is all about getting them in another rental unit versus selling some products. We did sell more in the first quarter, because we had some back-up inventory from last year, but at this point it’s all about renting them another item.

The next question is from Shannon Ward with Oak tree Capital Management.

The $12 Million of debt re-payment in the second quarter, was that also to reduce the term loan? You have no borrowings under the revolver now, right?

We had about $5 Million paid down on term loan “B”. The rest was in our $20 Million line of credit outside our revolver with our treasury bank, and we were a little bit drawn in that. So a portion of that went to pay off that line of credit, the other portion went to pay down the “B” line.

And what is your interest expense on the”B”? Libor plus what?

I think it is Libor plus 175 right now, and on “A” in the revolver, it is Libor plus 150.

Can you share with us your guidance for what you expect to spend on purchases of rental merchandise in the full year?

We expect a working capital of about $20-25 Million this year. Purchases for the year are estimated to be in the $770-800 Million range roughly.

And how about what you purchased in the cord of the Q1 for rental merchandise purchases?

About $215 Million.

The tax law changes that you spoke about earlier. Can you give me more detail on that? Is that a timing issue, or it looks like in your free cash flow that you’re building in “0” cash taxes. Can you help me understand that?

That is correct. The economic stimulus package that Bush signed on February 13th, 2008 to invigorate the economy allows companies to accelerate the depreciation, they call it bonus appreciation. They get a 50% additional benefit in depreciation. Our rental merchandise falls into that category. So from a cash tax standpoint we do not anticipate being a cash tax payer in 2008, so it is a temporary benefit. Obviously we will have to pay that back starting next year and going forward. For this year, we will have a $65-70 Million benefit in our free cash from that event.

So would it be wrong to assume then that next year in 2009 you would have that much more in the way of cash taxes?

Taxes are very complicated. It’s not necessarily one-to-one. We tried to provide a little more color on that in the Q and I just don’t have the specifics of how it breaks out going forward at this point. Certainly over three years starting with 2009 you would expect to pay it back. I don’t know how much would be 2009 versus 2010 and 2011, but certainly over three years you would factor that back in.

Lastly just walking through your guidance for free cash flow from $230-250, it looks like it’s pretty simple. The Four hundred taking the middle range of your EBITDA less around $80 of interest expense, around $70 of CapEx, and then something around the $20 Million of working capital that you just mentioned? Is there anything else in there that I am missing?

No, you’re in the ball park.

The next question is from Andrew Berg with Post Advisory Group

What was CapEx in the quarter?

CapEx was approximately $15 Million.

Any chance we could break out on any of the current liability lines? AP or accrued liabilities?

The Q will be filed on Friday. I don’t have the numbers broken out specifically in front of me right now.

What was the dollar amount on the availability of your revolver at the end of the quarter?

$270 Million.

Lastly, as you think about that free cash flow and the balance sheet, between debt reduction and investment in the business, and stock buy-backs, can you weight those as to how you think the capital is going to get used?

I can’t tell you with certainty. If you look at it historically we have done all of those things, be it debt pay-down, share re-purchase. I think first and foremost we invest in the business and we continue to do that. The first quarter we chose to pay down debt, but 98% of that was simply to pay down the revolver that we had a draw against in the fourth quarter to fund the settlement. Going forward we will continue to evaluate all of the various opportunities and which one makes more sense in terms of enhancing shareholder value as well as giving us the flexibility that we believe we will need to continue to execute the business for the long term.

Under your restricted payments basket, under the bonds, you still had a pretty significant ability to buy back stock, is that correct? In the several hundred dollar range?

Yes, under the indentureds over $120 Million right now, into the senior credit facility our senior credit ratio is right at two times. As long as we are below 2.5 times senior leverage perspective it is unlimited, so right now we are primarily restricted from a covenant stand-point on the indenture, which again is over $120 Million. The board authorized amount from our board-approved plan. We have about $55 Million remaining under that plan, that is a lot easier to change and manage than going back to get additional flexibility under the indentured. [inaudible]

The next question is from Jordan[ Humawitz ]from Philadelphia Finance. Jordan [Humawitz]- Philadelphia Finance: First of all your guidance assumes Libor is at what?

It is consistent with roughly where it is now, which is about 2.9-3.0%. We do anticipate it coming down a quarter of a point at the next Fed meeting which is this week, and then kind of staying there for the balance of the year. Jordan {Humawitz]- Philadelphia Finance: So when you last gave guidance you assumed a 5.25% Libor, and I would have thought that with rates coming down that would have added $.15 to your earnings, so is there something that is offsetting that $.15 benefit?

If you look at our first quarter guidance we gave an estimate for interest expense of $70-75 Million. Our current guidance estimates an interest expense to be roughly $65 Million, so that is about a $5-10 Million benefit. We’re not going to sit here and try to manage the business on interest rate fluctuations so we are hedging a little bit in terms of what the interest rates may do. Jordan [Humawitz]- Philadelphia Finance: So you said it would be $65 Million for the year?

That is the guidance that we’re giving, yes. Jordan [Humawitz]- Philadelphia Finance: My other question is that it was a $.05- .07 loss for the payday business. It’s doing a little better. Is it still a $.05-.07 loss would you say?

The increase in dilution hasn’t changed, but it is in terms of what we are seeing operationally a little better, and it is really about building out the back office piece to move forward, but we’re not changing the dilution expectation at this point. Jordan [Humawitz]- Philadelphia Finance: You said it’s $65 Million now, and it was $75 Million before?

Correct. Jordan [Humawitz]- Philadelphia Finance: And that $5-10 Million would be offset in which category?

I’m not sure I understand your question. We had an annual guidance that had a range and that hasn’t changed. You can debate where we might be within that range I guess.

The $5 Million would translate to about $.05 Jordan and our earnings range for the year is a $.15 range, so that didn’t change it based on $5 Million. Jordan [Humawitz]- Philadelphia Finance: My last question is, you had a bunch of stores that came into the comp this quarter from RentWay. Can you quantify how much that contributed to the same store sales?

We were anticipating those stores coming in comping around 7-7.5% and they were in that range. And that benefitted the comp by close to 1%. Which was anticipated and expected in part of our original guidance. Jordan [Humawitz]- Philadelphia Finance: The other way to look at it would be the 2.8 comp would be 1.3 to 1.4 x merchandise sales and about 50 bases point x that so you are assuming 0-1% core comps on the existing businesses so to speak?

I think it is fair to say that the core stores without the merchandise sales and the benefit of RentWay would have had a flat comp in the first quarter.

We have reached the end of our allotted time for Question- and- Answer session. Mark, are there any closing remarks sir?

Ladies and gentlemen as always we appreciate your time and interest. We are pleased to spend the morning with you. Again we feel pretty good about the quarter, how we started the year. We are mindful of what is going on in the economy, we realize that we have a lot of work to do, but we believe we are positioned to capture some of those benefits and we look forward to reporting to you next quarter.