```

               SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C. 20549
                            FORM 10-Q

     (Mark One)

     [X] Quarterly Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

     For the quarterly period ended August 31, 2005 or

     [ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

     For the transition period from _____ to _____

                 Commission File Number: 0-9061

                    ELECTRO RENT CORPORATION
      Exact name of registrant as specified in its charter

         CALIFORNIA                         95-2412961
(State or Other Jurisdiction             (I.R.S. Employer
of Incorporation or Organization)       Identification No.)

                    6060 SEPULVEDA BOULEVARD
                 VAN NUYS, CALIFORNIA 91411-2501
      (Address of Principal Executive Offices and Zip Code)

                          818 786-2525
      (Registrant's Telephone Number, Including Area Code)

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.

  Yes  X    No _

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

  Yes  X    No _

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).

  Yes      No X

The number of shares outstanding of the registrant's common stock
as of September 12, 2005 was 25,175,340.

                              Page 1

                    ELECTRO RENT CORPORATION

                            FORM 10-Q

                         AUGUST 31, 2005

TABLE OF CONTENTS                                           Page

Part I: FINANCIAL INFORMATION                                  3

Item 1. Financial Statements                                   3

Condensed Consolidated Statements of Income for the Three      3
Months Ended August 31, 2005 and 2004 (Unaudited)

Condensed Consolidated Balance Sheets at                       4
August 31, 2005 and May 31, 2005 (Unaudited)

Condensed Consolidated Statements of Cash Flows for the        5
Three Months Ended August 31, 2005 and 2004 (Unaudited)

Notes to Condensed Consolidated Financial Statements           6
(Unaudited)

Item 2. Management's Discussion and Analysis of               11
Financial Condition and Results of Operations

Item 3. Quantitative and Qualitative Disclosures              20
About Market Risk

Item 4.  Controls and Procedures                              20

Part II: OTHER INFORMATION                                    21

SIGNATURES                                                    22

                              Page 2

Part I.  FINANCIAL INFORMATION
--------------------------------
Item 1. Financial Statements

                              ELECTRO RENT CORPORATION

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                   (Unaudited) (000's omitted except per share data)

                                                        Three Months Ended
                                                            August 31,
                                                         2005       2004
                                                       ---------- ----------

Revenues:
  Rentals and leases                                   $  21,156  $  19,608
  Sales of equipment
    and other revenues                                     5,394      6,011
                                                       ---------- ----------
    Total revenues                                        26,550     25,619
                                                       ---------- ----------
Operating expenses:
  Depreciation of rental
    and lease equipment                                    8,452      8,025
  Costs of revenues other
    than depreciation of
    rental and lease equipment                             2,663      3,160
  Selling, general and
    administrative expenses                                7,944      7,385
                                                       ---------- ----------
    Total operating expenses                              19,059     18,570
                                                       ---------- ----------
Operating profit                                           7,491      7,049
Interest and investment
  income, net                                                559        258
Income from litigation
  settlement                                                   0      1,758
                                                       ---------- ----------
Income before income taxes                                 8,050      9,065

Income taxes                                               3,065      3,438
                                                       ---------- ----------
Net income                                             $   4,985  $   5,627
                                                       ========== ==========
Earnings per share:
  Basic                                                    $0.20      $0.23
  Diluted                                                  $0.19      $0.22

Shares used in per
  share calculation:
  Basic                                                   25,119     24,900
  Diluted                                                 25,571     25,102

                              See accompanying notes to
                    condensed consolidated financial statements.

                                   Page 3

                              ELECTRO RENT CORPORATION

                        CONDENSED CONSOLIDATED BALANCE SHEETS
                             (Unaudited)(000's omitted)

                                       ASSETS

                                                       August 31,   May 31,
                                                          2005       2005
                                                       ---------- ----------

Cash and cash equivalents                              $  31,321  $  31,997
Marketable securities                                     48,970     48,800
Accounts receivable, net of allowance for
   doubtful accounts of $768 and $839                     11,561     10,548
Rental and lease equipment, net of accumulated
   depreciation of $133,154 and $133,170                 122,910    122,798
Other property, net of accumulated depreciation and
   amortization of $12,243 and $12,131                    15,626     15,722
Other                                                      3,475      3,357
                                                       ---------- ----------
                                                       $ 233,863  $ 233,222
                                                       ========== ==========

                        LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
  Accounts payable                                     $   6,832  $  13,983
  Accrued expenses                                         9,465      8,700
  Deferred revenue                                         2,895      2,768
  Deferred tax liability                                  13,950     12,754
                                                       ---------- ----------
    Total liabilities                                     33,142     38,205
                                                       ---------- ----------
Shareholders' equity:
  Preferred stock, $1 par - shares authorized 1,000,000;
    none issued
  Common stock, no par - shares authorized 40,000,000;
    issued and outstanding August 31, 2005 - 25,172,461;
    May 31, 2005 - 25,100,132                             22,357     21,638
  Retained earnings                                      178,364    173,379
                                                       ---------- ----------
    Total shareholders' equity                           200,721    195,017
                                                       ---------- ----------
                                                       $ 233,863  $ 233,222
                                                       ========== ==========

                              See accompanying notes to
                    condensed consolidated financial statements.

                                   Page 4

                              ELECTRO RENT CORPORATION

                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (Unaudited) (000's omitted)

                                                        Three Months Ended
                                                            August 31,
                                                          2005       2004
                                                       ---------- ----------

Cash flows from operating activities:
  Net income                                           $   4,985  $   5,627
  Adjustments to reconcile net income to net cash
  provided by operating activities:
    Depreciation and amortization                          8,693      8,246
    Provision for losses
      on accounts receivable                                  48          3
    Gain on sale of rental and lease equipment            (2,288)    (2,455)
    Income from litigation settlement                          0     (1,758)
    Deferred tax liability                                 1,196       (172)
    Change in operating assets and liabilities:
      Accounts receivable                                 (1,061)    (1,858)
      Other assets                                          (130)        39
      Accounts payable                                      (364)      (858)
      Accrued expenses                                       765      2,432
      Deferred revenue                                       127        488
                                                       ---------- ----------
      Net cash provided by operating activities           11,971      9,734
                                                       ---------- ----------
Cash flows from investing activities:
  Proceeds from sale of rental and lease equipment         4,338      4,968
  Payments for purchase of rental and lease equipment    (17,401)   (20,818)
  Purchases of marketable securities                        (170)    (6,075)
  Payments for purchase of other property                   (133)       (11)
                                                       ---------- ----------
      Net cash used in investing activities              (13,366)   (21,936)
                                                       ---------- ----------
Cash flows from financing activities:
  Tax benefit for stock options exercised                    140          0
  Proceeds from issuance of common stock                     579         36
                                                       ---------- ----------
      Net cash provided by
        financing activities                                 719         36
                                                       ---------- ----------
Net decrease in cash and cash equivalents                   (676)   (12,166)
Cash and cash equivalents at beginning of period          31,997     29,692
                                                       ---------- ----------
Cash and cash equivalents at end of period             $  31,321  $  17,526
                                                       ========== ==========

                              See accompanying notes to
                    condensed consolidated financial statements.

                                   Page 5

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
          (U.S. dollar amounts and shares in thousands,
                    except per share amounts)

Note 1: Basis of Presentation

The condensed consolidated financial statements included herein
have been prepared by Electro Rent Corporation without audit,
pursuant to the rules and regulations of the Securities and
Exchange Commission (the "SEC").  The condensed consolidated
financial statements include the accounts of Electro Rent
Corporation and its wholly owned subsidiaries, Genstar Rental
Electronics, Inc., ER International, Inc. and Electro Rent
(Tianjin) Rental Co., Ltd.  (collectively "we", "us", or "our"
hereafter) as consolidated with the elimination of all
intercompany transactions.  Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted pursuant
to such SEC rules and regulations.  These condensed consolidated
financial statements reflect all adjustments and disclosures
which are, in the opinion of management, necessary for a fair
presentation of our financial position and results of operations
for the interim periods presented.  These condensed consolidated
financial statements should be read in conjunction with the
audited financial statements and notes thereto included in our
latest Annual Report on Form 10-K.

The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities as
well as the disclosures of contingent assets and liabilities as
of the date of these financial statements and the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates, and results of
operations for interim periods are not necessarily indicative of
results for the full year.

Note 2: Stock-Based Compensation

At August 31, 2005, we had four stock option plans, which are
described more fully in Note 12 in our 2005 Annual Report on Form
10-K.  We apply the intrinsic-value-based method prescribed by
Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees," in accounting for employee stock
options and provide pro forma net income and pro forma earnings
per share disclosures for employee stock option grants as if the
fair-value-based method, defined in Statement of Financial
Accounting Standards ("SFAS") No. 123 (as amended by SFAS No.
148), "Accounting for Stock-Based Compensation", had been
applied.  Had we determined compensation cost based on the fair
value at the grant date for the company's stock options under
SFAS No. 123, our net income would have been reduced to the pro
forma amounts indicated below for the three-month periods
presented:

                             Page 6

                                 Three Months
                               Ended August 31,
                               ----------------
                                 2005     2004
                                -------  -------
Net income, as reported          $4,985   $5,627
Deduct: Total stock-based
  employee compensation
  expense determined
  under the fair value
  based method for all
  awards, net of
  related tax effects              (187)    (280)
                                -------  -------
Pro forma net income             $4,798   $5,347
                                =======  =======
Earnings per share:
  Basic, as reported              $0.20    $0.23
  Basic - pro forma               $0.19    $0.21

  Diluted, as reported            $0.19    $0.22
  Diluted - pro forma             $0.19    $0.21

On December 16, 2004, the Financial Accounting Standards Board
(FASB) issued SFAS No. 123R, "Share-Based Payment," requiring all
share-based payments to employees, including grants of employee
stock options, to be recognized as compensation expense in the
consolidated financial statements based on their fair values.
This standard is effective for the first annual period beginning
after June 15, 2005 and includes two transition methods.  Upon
adoption, we will be required to use either the modified
prospective or the modified retrospective transition method.
Under the modified prospective method, awards that are granted,
modified, or settled after the date of adoption should be
measured and accounted for in accordance with SFAS 123R.
Unvested equity-classified awards that were granted prior to the
effective date should continue to be accounted for in accordance
with SFAS 123, except that the Share-Based Payments must be
recognized in the income statement.  Under the modified
retrospective approach, the previously reported amounts are
restated (either to the beginning of the year of adoption or for
all periods presented) to reflect the SFAS 123 amounts in the
income statement.  We are currently evaluating the impact of this
FASB standard and the transitional reporting alternatives
described.

Note 3: Impairment of Assets

We assess the carrying value of equipment on a quarterly basis or
when factors indicating an impairment are present.  We recognize
impairment losses on the carrying value of equipment held for
rental and lease when the expected future undiscounted cash flows
from rent or lease are less than the asset's carrying value, in
which case the asset is written down to its estimated fair value.
There were no impairment losses recorded during the three months
ended August 31, 2005 and August 31, 2004.

                             Page 7

Note 4: Noncash Investing and Financing Activities

We had accounts payable and other accruals related to acquired
equipment totaling $6,787 and $12,318 as of August 31, 2005 and
May 31, 2005, respectively, and $14,298 and $14,703 as of August
31, 2004 and May 31, 2004, respectively, which amounts have
previously been paid, or will be paid in the following periods.

Note 5: Sales-type Leases

We had certain customer leases providing bargain purchase
options, which are accounted for as sales-type leases.  Interest
income is recognized over the life of the lease using the
effective interest method.  The minimum lease payments receivable
and the net investment included in other assets for such leases
are as follows at:

                                               August      May
                                                 31,       31,
                                                2005      2005
                                               ------    ------
Gross minimum lease payments receivable         $ 424     $ 586
Less - unearned interest                          (20)      (29)
                                               ------    ------
Net investment in sales-type lease              $ 404     $ 557
  receivables                                  ======    ======

Note 6: Segment Reporting and Related Disclosures

SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information," establishes annual and interim reporting
standards for an enterprise's operating segments and related
disclosures about its products, services, geographic areas and
major customers.  Under SFAS No. 131, our operations are treated
as one operating segment.

Although we have only one operating segment, we have two groups
of similar products:  test and measurement (T&M) and data
products (DP) equipment.  Our equipment pool, based on
acquisition cost, comprised $217,295 of T&M equipment and $38,769
of DP equipment at August 31, 2005, and $217,725 of T&M equipment
and $38,243 of DP equipment at May 31, 2005.

Revenues for these product groups were as follows for the three
months ended:

                             Page 8

                                     T&M        DP      Total
                                   --------  --------  --------
         August 31, 2005
        -----------------
Rentals and leases                 $ 17,087   $ 4,069  $ 21,156
Sales of equipment and other
  Revenues                            4,696       698     5,394
                                   --------  --------  --------
                                   $ 21,783   $ 4,767  $ 26,550
                                   ========  ========  ========
         August 31, 2004
        -----------------
Rentals and leases                  $14,762    $4,846   $19,608
Sales of equipment and other
  Revenues                            5,714       297     6,011
                                   --------  --------  --------
                                    $20,476    $5,143   $25,619
                                   ========  ========  ========

No single customer accounted for more than 10% of total revenues
during the first three months of fiscal 2005 or fiscal 2004.

Selected country information is presented below:

                               Three Months Ended
                                   August 31,
                                ----------------
Revenues: (1)                    2005      2004
---------                       -------   -------
U.S.                            $23,340  $ 22,631
Other (2)                         3,210     2,988
                                -------   -------
Total                          $ 26,550  $ 25,619
                                -------   -------

                                As of August 31,
                                ----------------
Net Long-Lived Assets: (3)       2005      2004
-------------------------      --------  --------
U.S.                           $126,862  $126,268
Other (2)                        11,674    12,252
                               --------  --------
Total                          $138,536  $138,520
                               --------  --------

(1) Revenues by country are based on the location of the
customer.

(2) Other consists of other foreign countries that individually
account for less that 10% of the total revenues or assets.

(3) Net long lived-lived assets include rental and lease
equipment and other property, net of accumulated depreciation.

                             Page 9

Note 7: Computation of Earnings Per Share

Following is a reconciliation of the denominator used in the
computation of basic and diluted EPS for the periods ended August
31, 2005 and August 31, 2004:

                                  Three Months
                                 ended August 31,
                                  ---------------
                                   2005     2004
                                 -------  -------
Denominator:
  Denominator for basic
    earnings per
    share-weighted average
    common shares outstanding     25,119   24,900
  Effect of dilutive
    securities-options               452      202
                                 -------  -------
                                  25,571   25,102
                                 =======  =======
Net income                       $ 4,985   $5,627
Earnings per share:
  Basic                           $ 0.20   $ 0.23
  Diluted                         $ 0.19   $ 0.22

                             Page 10

Item 2.  Management's Discussion and Analysis of Financial
Condition and Results of Operations

The following discussion addresses our financial condition as of
August 31, 2005 and May 31, 2005 and the results of operations
for the three months ended August 31, 2005 and 2004, and cash
flows for the three-month period ended August 31, 2005 and 2004.
This discussion should be read in conjunction with the
Management's Discussion and Analysis section included in our 2005
Annual Report on Form 10-K (pages 10-18) to which the reader is
directed for additional information and the Risk Factors set
forth in Exhibit 99 to that Report.

General

We generate revenues through the rental, lease and sale of
electronic equipment, primarily test and measurement (T&M) and
personal computer-related (DP) equipment.  For the first three
months of fiscal 2006, 80.8% of rental and lease revenues were
derived from T&M equipment.  This percentage has been increasing
over the last four fiscal years and into the current quarter.
This has been a result of a steady erosion of DP rental and lease
revenues related to declines in product purchase prices and unit
volume and increasing T&M activity in telecommunications,
aerospace and defense markets during fiscal 2005 and in the first
three months of fiscal 2006.  Rental revenues comprised 80.2% of
rental and lease revenue.  That percentage has also been
increasing over the last four years due to a significant decline
in personal computer leasing activity, and the increase in rental
activity that began in fiscal 2005.

A significant part of our T&M equipment portfolio is rented or
leased to large companies in the aerospace, defense, electronics
and telecommunications industries.  We believe that a large part
of our T&M equipment is used in research and development
activities.  We also rent equipment to companies of various sizes
representing a cross-section of American industry.

The profitability of our business also depends in significant
part on controlling the timing, pricing and mix of purchases and
sales of equipment.  We seek to acquire new and used equipment at
attractive prices for the purpose of deriving a profit from a
combination of renting and/or selling such equipment.  The sale
of equipment, either after acquisition or after it has been
rented, can comprise a significant portion of revenues and
operating profit.  To maximize overall profit from the rental,
leasing, and sales of equipment, we manage our equipment pool on
an on-going basis by analyzing our product strategy for each
specific equipment class in light of that equipment's historical
and projected life cycle.  In doing so, we must compare our
estimate of potential profit from rental with the potential
profit from the product's immediate sale and replacement with new
or other equipment.  In our analysis, we assume depreciation and
impairment of equipment based on projected performance and
historical levels, although historical trends are not necessarily
indicative of future trends.  Our overall equipment management is
complex and our product strategy can change during a product's
lifetime based upon numerous factors, including the U.S. and
global economy, interest rates and new product launches.  Our
strategic equipment decisions are based on the following
fundamentals:

                             Page 11

   Our acquisition cost;

   Our estimates of current and future market demand for
rentals;

   Our estimates of current and future supply of product;

   The book value of the product after depreciation and other
impairment;

   Our estimates of the effect of interest rates on rental and
leasing fees as well as capital financing; and

   Our estimates of the potential current and future sale
prices.

If we are unable to accurately predict market trends, or if
demand for the equipment we supply declines, we can be left with
large lots of inventory that we are unable to rent or sell for a
profit.  We assess the carrying value of the equipment pool on a
quarterly basis or when factors indicating impairment are
present.  When the U.S. and global economy began to rebound in
fiscal 2004, we saw increased demand for our equipment, and were
able to sell equipment that was older and more fully depreciated.
Due in part to these events, we experienced greater than normal
gross margins on equipment sales in fiscal 2005 and in the first
three months of fiscal 2006.  We intend to maintain our equipment
management strategy, and, accordingly, we expect that gross
margins on sales will return to normal historical levels of 40%
to 45% as older and previously impaired equipment constitute a
smaller percentage of sales.

However, results for future quarters are subject to future
events, as in the case of unusual opportunities for sales and
early termination of equipment leases.  Such early terminations
can (i) result in sales proceeds to the extent that the customer
decides to purchase the equipment involved, (ii) accelerate lease
payments to the extent of lease termination fees, and/or (iii) to
the extent the customer does not purchase the equipment, increase
the pool of equipment for lease by us, which would adversely
affect future utilization unless we can rent, lease or sell that
equipment to another party.

We measure our overall level of profitability with the following
metrics:

   Net income per diluted common share (EPS);

   Net income as a percentage of average assets; and

   Net income as a percentage of average equity.

On May 2, 2005, we announced that we have received what we
believe to be one of the first licenses for a wholly foreign-
owned equipment rental business in China.  With the license
awarded by the Tianjin Economic-Technological Development Area
(TEDA), our wholly owned subsidiary in Tianjin, China, commenced
operations in June 2005.

                             Page 12

PROFITABILITY AND KEY BUSINESS TRENDS

During fiscal 2005 and the first quarter of fiscal 2006, we
improved operating profit in each quarter as compared to the same
respective quarter in the prior year.  Improved gross profit on
equipment sales, higher asset levels on rent, and higher rental
yields led to this improvement.

During fiscal 2005, we began to focus on core T&M and DP markets.
Organic growth for the first quarter of fiscal 2006 has been
modest, consistent with the economic environment.  Focused,
prudent growth continues to be a primary goal for fiscal 2006.

Our profitability measurements are presented in the table below
for the three months ended August 31, 2005 and 2004:

                                             2005     2004
                                             ----     ----
Net income per diluted common share (EPS)   $0.19    $0.22
Net income as a percentage of
  average assets                              8.4%    10.7%
Net income as a percentage of average
  equity                                      9.9%    13.1%

T&M rental and lease activity increased from the first quarter of
2005 to the first quarter of fiscal 2006, reflecting the
strengthening global economy.  However, DP lease demand continued
to be weak and rental and lease rates remained competitive in
fiscal 2006.

The amount of equipment on rent, based on acquisition cost,
decreased from $114.3 million at August 31, 2004, to $110.8
million at August 31, 2005.  Acquisition cost of equipment on
lease decreased from $40.0 million at August 31, 2004, to $37.9
million at August 31, 2005.  Utilization for our T&M equipment
pool, again based on acquisition cost, decreased from 64% at
August 31, 2004, to 62% at August 31, 2005.  This reflects our
strategy during fiscal 2005 to make aggressive new equipment
purchases in order to add depth to core product groups and
fulfill more customer orders.  Utilization of our DP equipment
pool decreased from 72% to a more normal 60% over the same
period, reflecting the loss of two significant data products
customers during the third quarter of fiscal 2005.

During the same period, monthly rental rates for T&M and DP
equipment increased by 8.8% and 15.8% respectively, while monthly
T&M lease rates decreased by 3.7% and monthly DP lease rates
increased by 6.7%.  There were no impairment losses recorded
during the three months ended August 31, 2005 and August 31,
2004.

We believe that demand for rental electronic equipment should
improve provided the U.S. economy continues to recover.  Also,
any increased defense spending on advanced weapons and
intelligence systems should benefit our business.  While those
developments continue to unfold, however, we will strive to
operate the business efficiently at the prevailing activity
levels.

                             Page 13

The following table shows the revenue and income trends over the
last five quarters (in thousands):

                                Three Months Ended
                               -------------------
                      Aug.   May 31,   Feb.    Nov.     Aug.
                      31,               28,     30,      31,
                      2005    2005     2005    2004     2004
                               (1)      (2)     (3)      (4)
                     ------  ------   ------  ------   ------
Rentals and leases   $21,156 $20,772  $18,846 $21,031  $19,608
Sales of equipment
  and other
  revenues             5,394   4,946    9,936   6,466    6,011
Net income             4,985   5,467    6,945   6,226    5,627

(1) For the three months ended May 31, 2005, income taxes were
reduced by $1,123 due to a change in estimated liability.

(2) For the three months ended February 28, 2005, income taxes
were reduced by $699 due to a change in estimated liability.

(3) For the three months ended November 30, 2004, income taxes
were reduced by $655 due to a change in estimated liability.

(4) For the three months ended August 31, 2004, net income
included $1.8 million (pre-tax) related to funds received from a
class action lawsuit.

Critical Accounting Policies and Estimates

The preparation of condensed financial statements in conformity
with accounting principles generally accepted in the United
States of America ("generally accepted accounting principles")
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the 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.  On a regular basis, management
reviews these estimates including those related to asset lives
and depreciation methods, impairment of long-lived assets
including rental and lease equipment, allowance for doubtful
accounts and income taxes.  These estimates are based on
management's historical experience and on various other
assumptions believed to be reasonable under the circumstances.
Actual results may differ from these estimates under different
assumptions or conditions.  Management believes, however, that
the estimates, including those for the above-listed items, are
reasonable.

Management believes the following critical accounting policies
affect the more significant judgments and estimates used in the
preparation of our financial statements:

                             Page 14

Asset lives and depreciation methods:  Our primary business
involves the purchase and subsequent rental and lease of long-
lived electronic equipment.  Management has chosen asset lives
that it believes correspond to the economic lives of the related
assets.  Management has chosen depreciation methods that it
believes match our benefit from the assets with the associated
costs.  These judgments have been made based on management's
expertise in each equipment type that we carry.  If the asset
life and depreciation method chosen do not reduce the book value
of the asset to at least our potential future cash flows from the
asset, we would be required to record an impairment loss.  For new
equipment, depreciation methods and useful lives are periodically
reviewed and revised as deemed appropriate.

Impairment of long-lived assets: On a quarterly basis, management
reviews the carrying value of our rental and lease equipment to
determine if the carrying value of the assets may not be
recoverable due to current and forecasted economic conditions.
This requires management to make estimates related to future cash
flows from the assets and to determine whether any deterioration
is temporary or permanent.  If these estimates or the related
assumptions change in the future, management may be required to
record additional impairment charges.

Allowance for doubtful accounts and equipment losses:  We
maintain allowances for doubtful accounts for estimated losses
resulting from the inability of customers to pay our invoices.
We also maintain an allowance for estimated losses resulting from
the inability of customers to pay for lost equipment.  These
estimates are primarily based on the amount of time that has
lapsed since the related payments were due as well as specific
knowledge related to the ability of customers to make the
required payments.  If the financial condition of our customers
were to deteriorate, additional allowances could be required that
would reduce income.  Conversely, if the financial condition of
the customers were to improve or if legal remedies to collect
past due amounts were more successful than expected, the
allowances for doubtful accounts and equipment losses may need to
be reduced and income would be increased.

Income Taxes: As part of the process of preparing our
consolidated financial statements, management is required to
estimate income taxes in each of the jurisdictions in which we
operate.  Significant management judgment is required in
determining the provision for income taxes and deferred tax
assets and liabilities.  This process involves management
estimating actual current tax exposure together with assessing
temporary differences resulting from differing treatment of
items, such as depreciation and amortization, for tax and
accounting purposes.  These differences result in deferred tax
assets and liabilities, which are included within our
consolidated balance sheet.  We then assess the likelihood that
our deferred tax assets will be recovered.  To the extent
management believes that recovery is not likely, we establish a
valuation allowance.  Management determined that a valuation
allowance of $58 was required as of August 31, 2005 for the
deferred tax amount arising from operations in China.

                             Page 15

Results of Operations

Comparison of Three Months Ended August 31, 2005
and August 31,2004

Revenues

Total revenues for the three months ended August 31, 2005 rose
$0.9 million, or 3.6%, to $26.6 million, compared to $25.6
million in the same period in the prior year.  The increase in
total revenues was due to a 7.9% increase in rental and lease
revenues which was offset by a 10.3% decrease in sales of
equipment and other revenues.

Rental and lease revenues in the first quarter of fiscal 2006
increased 7.9% to $21.2 million from $19.6 million in the same
period of the prior year.  This increase reflects higher demand
and rental rates for T&M equipment in our major market segments,
which we believe stems from the general economic recovery.

Sales of equipment and other revenues decreased 10.3% to $5.4
million in the first quarter of fiscal 2006, from $6.0 million in
the first quarter of fiscal 2005.  This decrease is largely due
to the liquidation of a substantial amount of lower-utilized
equipment during the last two years, which left less equipment
available for sale in the current fiscal year.

We sell used equipment as a normal part of our rental business.
However, these sales can fluctuate from quarter to quarter and
year to year depending on equipment availability and customer
requirements and funding.  Gross margin on sales decreased to
$2.3 million in the first quarter of fiscal 2006 from $2.5
million a year ago.  At the same time, the gross margin
percentage increased to 52.8%, in the first quarter of fiscal
2006, compared to 49.4%, in the first quarter of fiscal 2005.
The decline in gross margin reflects the lower level of equipment
available for sale, while the increase in the gross margin
percentage indicates that the equipment sold was either more
fully depreciated than in the prior year, or had been written
down due to impairment.  In fiscal 2005 and continuing into the
current quarter, our gross margin percentage has been relatively
high.  However, we expect that it will return to more normal
levels of 40% to 45% over the next two years, as older and
previously impaired equipment constitute a smaller percentage of
equipment sold.

Operating Expenses

Depreciation of rental and lease equipment increased to $8.5
million, or 40.0% of rental and lease revenues, in the first
quarter of fiscal 2006, from $8.0 million, or 40.9% of rental and
lease revenues, in the first quarter of fiscal 2005.  The
increased depreciation expense reflects higher expenditures for
new rental and lease equipment during fiscal 2004 and fiscal
2005, while the lower ratio reflects increased revenues in the
current period.

                             Page 16

Costs of revenues other than depreciation decreased 15.7% to $2.7
million in the first quarter of fiscal 2006, from $3.2 million in
the third quarter of fiscal 2005.  Costs of revenues other than
depreciation primarily includes the cost of equipment sales,
which decreased to 47.2% of equipment sales in the first quarter
of fiscal 2006, from 50.6% of equipment sales in the first
quarter of fiscal 2005.  The decrease in this percentage is
generally due to a greater portion of equipment that was sold in
fiscal 2006 which was more fully depreciated or had been
previously written down.

Selling, general and administrative expenses increased 7.6% to
$7.9 million in the first quarter of fiscal 2006 million, as
compared to $7.4 million in the first quarter of fiscal 2005.
This reflects expenditures for the development of foreign
operations in the current fiscal year as well as higher costs, as
compared to last year, for Sarbanes-Oxley compliance.  These
expenses as a percentage of total revenues increased to 29.9% in
the first quarter of fiscal 2006 from 28.8% in the first quarter
of fiscal 2005.

Interest and Investment Income, Net

Net interest and investment income of $.6 million for the first
quarter of fiscal 2006 was about twice the $.3 million recorded
in the first quarter of fiscal 2005.  This largely reflects
increases in prevailing money-market interest rates.

Income from Litigation Settlement

In the first quarter of fiscal 2005, when all contingencies
expired, the Company recognized as other income $1.8 million
related to funds received from a class action lawsuit.  There was
no comparable income in the current year period.

Income Taxes

Our effective tax rate was 38.1% in the first quarter of fiscal
2006, compared to 37.9% for the same period in fiscal 2005.  The
effective tax rate increased primarily as a result of the
valuation allowance for the U.S. tax benefit of operations in
China.

Liquidity and Capital Resources

During the last three fiscal years, our primary capital
requirements have been purchases of rental and lease equipment.
We generally purchase equipment throughout each year to replace
equipment that has been sold, and to maintain adequate levels of
rental equipment to meet existing and new customer demands.  To
support areas of potential growth for both T&M and DP equipment,
and to keep our equipment pool technologically up-to-date, we
made payments for the purchase of $17.4 million of rental and
lease equipment during the first quarter of fiscal 2006.  This
amount was 16.4% lower than the comparable figure in the prior
year.

                             Page 17

On January 14, 2004, we paid a special distribution of $4.00 per
outstanding common share, which totaled $99.5 million.  Following
this distribution, cash, cash equivalents and marketable
securities remained relatively stable.  We expect that the level
of these liquid assets will begin to increase, unless equipment
purchases increase in response to demand, or we decide to buy
back additional shares of our common stock, pay another special
distribution, pay dividends, finance another acquisition, or
pursue other opportunities.  We have invested our cash balance in
money market funds and other instruments with maturities of less
than 90 days.

During the first three months of fiscal 2006 and fiscal 2005 net
cash provided by operating activities was $12.0 million and $9.7
million, respectively.  This increase is primarily due to the prior
year recognition of non-cash income from a litigation settlement.

During the three months ended August 31, 2005 net cash used in
investing activities was $13.4 million, compared to $21.9 million
in the same period of fiscal 2005.  This decrease is mostly
attributable to lower payments for the purchase of rental and
lease equipment and marketable securities.

Net cash flows from financing activities were higher in the first
quarter of fiscal 2006 as compared the same period last year, due
to a greater amount of stock options that were exercised.

We have a $10.0 million revolving line of credit with an
institutional lender, subject to certain restrictions, to meet
equipment acquisition needs as well as working capital and
general corporate requirements.  We have had no bank borrowings
since the first quarter of fiscal 2001.

                             Page 18

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

Except for the historical statements and discussions, statements
contained in this Form 10-Q constitute forward-looking statements
within the meaning of section 21E of the Securities Exchange Act
of 1934.  These forward-looking statements reflect the current
views of our management with respect to future events and
financial performance; however, you should not put undue reliance
on these statements.  We undertake no obligation to update or
revise any forward-looking statements that are or may be affected
by developments, which our management does not deem material.
When used in this Form 10-Q, the words "anticipate," "believes,"
"expects," "intends," "future," and other similar expressions
identify forward-looking statements.  These forward-looking
statements are subject to certain risks and uncertainties, not
all of which are disclosed in this Form 10-Q.  We believe our
management's assumptions are reasonable; nonetheless, it is
likely that at least some of these assumptions will not come
true.  Accordingly, our actual results will likely differ from
the outcomes contained in any forward-looking statement, and
those differences could be material.  Factors that could cause or
contribute to these differences include, among others, those
risks and uncertainties discussed under the sections contained in
this Form 10-Q entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and in
"Quantitative and Qualitative Disclosure About Market Risk
Related to Interest Rates and Currency Rates," as well as in our
Annual Report on Form 10-K for the year ended May 31, 2005
including the "Risk Factors" attached as Exhibit 99 to that
document, our Proxy Statement for our 2005 Annual Meeting of
Shareholders and our other filings with the Securities and
Exchange Commission.  Should one or more of the risks discussed,
or any other risks, materialize, or should one or more of our
underlying assumptions prove incorrect, our actual results may
vary materially from those anticipated, estimated, expected or
projected.

                             Page 19

Item 3.  Quantitative and Qualitative Disclosures About Interest
Rates and Currency Rates

We are exposed to market risks related to changes in interest
rates and foreign currency exchange rates, however, we do not
believe those risks to be material in relation to our operations.
We do not have any derivative financial instruments.

As of August 31, 2005 and May 31, 2005, cash and cash equivalents
included money market securities, and we had investments in
marketable securities.  Due to the short-term duration of our
investment portfolio, an immediate 10% change in interest rates
would not have a material effect on the fair market value of our
portfolio, therefore, we would not expect our operating results
or cash flows to be affected to any significant degree by the
effect of a sudden change in market interest rates on our
securities portfolio.

We are also subject to risks associated with foreign currency
rate fluctuations to the extent of financing arrangements for
rented and leased equipment denominated in Canadian dollars,
euros and Chinese yuan.  We have determined that hedging of these
assets is not cost effective and instead we attempt to minimize
risks due to currency and exchange rate fluctuations through
working capital management.  We do not believe that any
foreseeable change in currency rates would materially or
adversely affect our financial position or results of operations.

Item 4: Controls and Procedures

Our management, with the participation of our Chief Executive
Officer and Chief Financial Officer, evaluated the effectiveness
of our disclosure controls and procedures (as defined in Rule 13a-
15(e) of the Exchange Act) as of the end of the period covered by
this report.  Based on that evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that our disclosure
controls and procedures as of the end of the period covered by
this report were effective in ensuring that information required
to be disclosed by us in reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange
Commission's rules and forms.

There was no change in our internal control over financial
reporting (as defined in Rule 13a-15(f) of the Exchange Act) that
occurred during our most recent fiscal quarter that has
materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.

                             Page 20

Part II.  OTHER INFORMATION

Item 1.  Legal Proceedings

None.

Item 2.  Unregistered Sales of Equity Securities and Use of
Proceeds.

None.

Item 3.  Defaults Upon Senior Securities.

None.

Item 4.  Submission of Matters to a Vote of Security Holders

None

Item 6.  Exhibits

(a) (* Indicates compensation plan, contract or arrangement)

Exhibit #   Description
---------   -----------
3           Articles of Incorporation (Restated) and bylaws are
            incorporated by reference to Exhibits 1.2 and 6.1,
            respectively, of Registration Statement (Form S-14),
            File No. 2-63532.  A copy of the Restated Articles of
            Incorporation and the Certificate of Amendment of
            Restated Articles of Incorporation filed October 24,
            1988 are incorporated by reference to Exhibit (3) to
            the Annual Report (Form 10-K) for the fiscal year
            ended May 31, 1989.  A copy of the Certificate of
            Amendment of Restated Articles of Incorporation filed
            October 15, 1997 is filed as Exhibit (3) to the
            Annual Report (Form 10-K) for the fiscal year ended
            May 31, 1999.  A copy of the amendment to the bylaws
            adopted October 6, 1994 is incorporated by reference
            to the Annual Report (Form 10-K) for the fiscal year
            ended May 31, 1995.  A copy of the amendment to the
            bylaws adopted November 15, 1996 is incorporated by
            reference to Exhibit (3) of the Annual Report (Form
            10-K) for the fiscal year ended May 31, 1997

31.1        Rule 13a-14(a)/15d-14(a) Certification of Chief
            Executive Officer

31.2        Rule 13a-14(a)/15d-14(a) Certification of Chief
            Financial Officer

32.1        Section 1350 Certification by Principal Executive
            Officer

32.2        Section 1350 Certification by Chief Financial Officer

                             Page 21

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereto duly authorized.

ELECTRO RENT CORPORATION

DATED:  September 22, 2005

/s/ Craig R. Jones
Craig R. Jones
Vice President and Chief Financial Officer

                             Page 22
```