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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K/A

              [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1998
                                       OR
            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                           Commission File No. 1-14146

                       CORT BUSINESS SERVICES CORPORATION
             (Exact name of registrant as specified in its charter)

          Delaware                                       54-1662135
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

  4401 Fair Lakes Court, Fairfax, VA                       22033
(Address of principal executive offices)                 (Zip Code)

                                 (703) 968-8500
              (Registrant's telephone number, including area code)

           Securities registered pursuant to Section 12(b) of the Act:
       Title of each class             Name of each exchange on which registered
          Common Stock                          New York Stock Exchange

           Securities registered pursuant to Section 12(g) of the Act:

                                      None

     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 if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best  of  the  registrants'   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K.  Yes [X]  No [ ]

     Non-affiliates of CORT Business Services  Corporation held 6,904,501 shares
of Common Stock as of March 29, 1999. The fair market value of the stock held by
non-affiliates  is  $159,666,586  based on the sale price of the shares on March
29, 1999.

             As of March 29, 1999, 8,744,174 shares of Common Stock,
                        par value $.01, were outstanding.

         As of March 29, 1999, 4,350,411 shares of Class B Common Stock,
                        par value $.01, were outstanding.

                      Documents Incorporated by Reference:

                Document                                  Part of Form 10-K
                --------                                  -----------------
Annual Report to Stockholders for the fiscal year             Part II
          ended December 31, 1998

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<PAGE>

                                     PART I

ITEM 1.  Business

Overview

CORT  Business  Services  Corporation  (the  "Company"  or "CORT")  through  its
wholly-owned subsidiary CORT Furniture Rental Corporation ("CFR") is the leading
national provider of rental  furniture,  accessories and related services in the
growing and fragmented  "rent-to-rent" segment of the furniture rental industry.
The  "rent-to-rent"  segment serves both corporate and individual  customers who
desire  flexibility to meet their temporary and transitional  needs. The Company
focuses on corporate customers by offering office and residential  furniture and
related   accessories   through  a  direct  sales  force  of  approximately  900
salespeople  and a network of 119  showrooms  in 32 states and the  District  of
Columbia.  The Company believes that  approximately 80% of its rental revenue is
derived from its corporate customers, while the remainder is derived principally
from  rentals  to  middle-  and  upper-income  level  individuals.  The  Company
maintains the showroom quality  condition of its merchandise  available for rent
by  selling  its  previously  rented   merchandise   through  a  network  of  83
company-operated  clearance  centers,  thereby enabling the Company to regularly
update its  inventory  with new styles and new  merchandise.  Sales of furniture
through clearance centers, at prices which for the last five years have averaged
108% of the  furniture's  original  cost,  allow the  Company  to  maximize  the
residual  value of its rental  merchandise.  Furniture  sales through  clearance
centers and other sales accounted for  approximately  17% of the Company's total
1998 revenue.

As the industry leader and the only "rent-to-rent" furniture rental company with
a national presence, CORT is well-positioned to take advantage of growing demand
for furniture rental services. This demand is believed to be driven by continued
growth in management and professional  employment,  the increasing importance to
American business of flexibility and outsourcing and the impact of a more mobile
and transitory  population.  The Company is called upon to meet furniture rental
needs of a corporate  customer base which includes Fortune 500 companies,  small
businesses and professionals, and owners and operators of apartment communities.

According to industry  estimates,  a significant  portion of the  "rent-to-rent"
furniture  rental  revenues is derived from  single-location  and small regional
rental businesses which present attractive  consolidation  opportunities for the
larger  "rent-to-rent"  furniture  rental  companies  such as  CORT.  Since  the
beginning of 1993,  the Company has acquired  two larger  regional  competitors,
General  Furniture  Leasing and Evans Rents,  and has completed and successfully
integrated 19 lease  portfolio  acquisitions.  Management  believes that CORT is
well-positioned to continue  capitalizing on the industry's  consolidation trend
due to its national presence, leading market share and financial capacity.

Business Strategy

Management believes that CORT's size, national presence, consistently high-level
customer  service,  product  quality  and  broad  product  selection,  depth  of
management and efficient  clearance  centers have been key  contributors  to the
Company's success. The Company's objective is to build on these fundamentals and
increase  further its revenue and  operating  earnings and expand its margins by
continuing to pursue its growth  strategy.  The key  components of this strategy
are (i) making selective acquisitions; (ii) initiating operations in new markets
and adding showrooms and clearance centers in existing markets;  (iii) expanding
its corporate  customer base and (iv) continuing to invest in the development of
various products and services.

Acquisitions

The primary focus of the Company's growth strategy has been and will continue to
be the selective acquisition of small lease portfolios and regional companies in
new and existing markets. Since the beginning of 1993, the Company has completed
18 small lease portfolio  acquisitions  which include entrance into the New York
City, Salt Lake City, Pittsburgh and Cleveland markets. In addition, the Company
completed  the purchase of the rental  furniture  business of Instant  Interiors
Corporation.   This   acquisition   expands   CORT's  reach  into  the  Midwest,
particularly  in  Michigan,   Illinois,   Indiana,  and  Ohio,  and  provides  a
centralized  distribution  format  that  is  cost  effective  in  serving  large
geographic  areas  containing many smaller cities.  In a typical lease portfolio
acquisition,   the  Company  acquires  existing  leases  and  rental  furniture.
Additionally,  the Company  retains sales  personnel  with strong local customer
relationships.  The Company generally does not acquire  showrooms,  distribution
facilities or clearance  centers in existing markets.  However,  in new markets,
the Company may choose to retain such real estate. The Company also

                                      -1-

<PAGE>

believes  that there are a select  number of  opportunities  to  acquire  larger
regional  companies  in order to enter new markets and increase its market share
in existing markets.  For example,  the Company has acquired two larger regional
companies: General Furniture Leasing in September 1993, which had total revenues
of  approximately  $41.5 million for fiscal year 1992,  and Evans Rents in April
1996,  which had total revenues of  approximately  $30.5 million for fiscal year
1995. The acquisition of General  Furniture Leasing provided CORT with immediate
access to new  market  areas and  additional  critical  mass in CORT's  existing
markets.  Evans Rents provided CORT with additional critical mass in the greater
Los Angeles and San Francisco areas,  increased the percentage of rental revenue
derived  from  the  rental  of  higher-margin   office  furniture  products  and
contributed  additional expertise in the supply of furniture for trade shows and
conventions.

The Company entered the trade show furnishings  business through  acquisition of
three businesses in 1997. These businesses have been integrated to create CORT's
trade  show  furnishings  segment  and will  establish  CORT as one of the major
players in this segment of the furniture rental industry. To further expand this
segment,  the Company  purchased  certain  assets of the trade show  furnishings
business  of Aaron  Rents,  Inc.  in October  1998.  The trade show  furnishings
business  serves  the major  trade show  contractors  and  corporate  exhibitors
nationwide and provides  specialty  rental  furniture for use at conventions and
trade shows.  Major locations  served include:  Atlanta,  Chicago,  Dallas,  Las
Vegas,  Los Angeles,  New Orleans,  Orlando,  New York City, San Francisco,  and
Washington, D.C.

New Markets and Additional Facilities

The Company  continues to expand the number of showrooms and  clearance  centers
within  its  existing  markets as well as  initiate  new  operations,  including
showrooms,  distribution  facilities  and clearance  centers,  in  strategically
identified geographic locations where it currently does not conduct business and
where  attractive  acquisition  opportunities  do not exist.  By increasing  the
number of showrooms and clearance centers associated with existing  distribution
facilities,  the Company is able to  distribute  its real estate,  personnel and
other fixed costs over a larger revenue base.  Since the beginning of 1995, CORT
has  begun  operations  in  seven  new  metropolitan  markets:  Birmingham,  AL;
Huntsville,  AL; Little Rock, AR; Portland, OR; St. Louis, MO; Las Vegas, NV and
El Paso, TX.

Expanded Corporate Customer Base

The Company seeks to increase its corporate customer base in order to capitalize
on the longer lease  terms,  higher  average  lease  amounts and multiple  lease
transactions  associated  with  corporate  customers.  In  addition,   corporate
customers more frequently enter into higher-margin  office furniture leases. The
Company  intends to grow  revenue by  increasing  its  corporate  customer  base
through expanded  emphasis on national  accounts,  further  development of sales
personnel with business-to-business  sales experience and continued advertising.
In addition, the Company has introduced the high quality brand of office systems
furniture by Herman Miller.  The Company  continues to increase  awareness among
its sales  force of the  benefits  and breadth of its office  product  offerings
through expanded  training  programs and to focus the efforts of its sales force
on these  products  by  increased  incentive  compensation  for  office  product
rentals.

Development of Products and Services

The  Company  continues  to  invest in the  development  of other  products  and
services.  Products and services in various  stages of  development  include the
rental of housewares  amenity packages,  the supply of furniture for trade shows
and  conventions,  and  a  website  that  provides  information  for  relocating
customers. Management believes that the gradual introduction of new products and
services  allows the Company to experiment  with such products and services at a
relatively low initial cost.

The "Rent-to-Rent" Industry

The  "rent-to-rent"  segment  of  the  furniture  rental  industry  serves  both
corporate and individual customers who generally have immediate, temporary needs
for office or residential  merchandise but who typically do not seek to own such
merchandise.  Office product customers range from large  corporations who desire
flexibility to meet their temporary and transitional  needs, to small businesses
and professionals  who require office  furnishings but seek to conserve capital.
Residential   product   customers  include   corporations   seeking  to  provide
furnishings  for  corporate  employees  who have  been  relocated  or who are on
temporary assignment,  apartment community managers seeking to provide furnished
apartments and individual  residents  seeking to rent  furnishings for their own
homes and apartments.

                                      -2-

<PAGE>

Management believes the demand for rental products is driven by continued growth
in  management  and  professional  employment  levels,  the  changing  trends in
American  business towards  flexibility and outsourcing and the impact of a more
mobile and transitory population.

The "rent-to-rent"  business is differentiated  from the "rent-to-own"  business
primarily  by the  terms of the  rental  arrangements  and the type of  customer
served. "Rent-to-rent" customers generally desire high quality furniture to meet
temporary needs, have established credit, and pay on a monthly basis. Typically,
these  customers  do not seek to acquire  the  property  rented.  In the typical
"rent-to-rent" transaction, the customer agrees to rent merchandise for three to
six months,  subject to extension by the customer on a month-to-month  basis. By
contrast,  "rent-to-own"  arrangements  are generally made by customers  without
established  credit  whose  objective is to acquire  ownership of the  property.
"Rent-to-own"  arrangements are typically entered into on a month-to-month basis
and require weekly rental payments.

Operating Segments

The  Company  has  identified  the  following  operating  segments  based on the
distinct products/services from which each derives revenue:

Furniture Rental  - rental of residential  and office  furniture and accessories
                    to individual and corporate customers.

Furniture Sales   - sale of new or  previously  rented  residential  and  office
                    furniture to the general public.

Trade Show        - short term rental of display and workplace  furnishings  for
 Operations         trade   shows,   conventions,    and  special   events    to
                    corporate customers and trade show associations.

Housewares        - rental of kitchen,  bedroom and bathroom  accessories to the
 Operations         Furniture Rental segment.

Furniture  rental and furniture  sales  segments  represent the  aggregation  of
individual  districts,  all of which have similar economic  characteristics  and
distribution  methods.  Trade Show  Operations  and  Housewares  Operations  are
aggregated with furniture rental and furniture sales for reporting purposes.

The Company reports  separately,  in its Consolidated  Statements of Operations,
the revenue and associated cost of revenue of its reportable segments. Operating
segments are measured on the basis of gross margin; operating expenses, goodwill
amortization,  interest expense,  tax expense,  and extraordinary  items are not
allocated to the individual segments.

Assets and liabilities are not specifically  allocated  between Furniture Rental
and Furniture Sales. All rental furniture is available for rental or sale.

Products

The Company rents a full line of furniture and accessories throughout the United
States for office and residential purposes. The Company classifies its furniture
leases  based  on the  type of  furniture  leased  and the  expected  use of the
furniture.

Office Products

In order to capitalize on the significant  profit  potential  available from the
longer average  rental  periods and the higher  average  monthly rent for office
products,  the Company's strategy is to emphasize office furniture rentals.  The
Company  offers a full  range of  office,  conference  room and  reception  area
furniture,  including  desks,  chairs,  tables,  credenzas,  panel  systems  and
accessories.  In order to promote longer office lease terms,  the Company leases
furniture to its  corporate  customers at rates that reflect a premium on leases
that are less than six months and a discount on leases of more than six months.

The Company's office furniture  customers  consist  primarily of large companies
that desire flexibility to satisfy temporary and transitional needs and small or
start-up businesses that have immediate and changing furniture  requirements but
seek to minimize capital outlay. The Company emphasizes its ability to outfit an
entire office with high quality  furniture in two business  days, as well as its
ability to provide consistent customer service and product quality nationwide.

                                      -3-

<PAGE>

Residential Products

The  Company  leases  residential   products  to  corporate  customers  who  are
temporarily  or  permanently  relocating  employees,  to apartment  managers and
owners who are providing furnished apartments and to individual end users of the
furniture.  The Company offers a broad range of household  furniture,  including
dining  room,  living room and  bedroom  pieces,  as well as certain  electronic
products.

A significant portion of the Company's residential furniture rentals are derived
from corporate  relocations  and temporary  assignments,  as new and transferred
employees of the Company's corporate customers enter into leases for residential
furniture.  The  Company's  sales  personnel  maintain  contact  with  corporate
relocation departments and present the possibility of obtaining  fully-furnished
rental apartments as a lower cost alternative to hotel accommodations. Thus, the
Company  offers  its  corporate  rental  customers  a way to reduce the costs of
corporate  relocations  while  developing  residential  business  with  new  and
transferred  employees.  The  Company's  ability to service both  corporate  and
individual  needs  creates a broad  corporate  customer base  accompanied  by an
increasing pool of employees utilizing the Company's residential services.

Other Products and Services

CORT offers several other products and services in selected markets. The Company
offers houseware amenity packages (such as linens, towels, dishes,  cookware and
other kitchen,  bedroom and bath  accessories)  for rent to its furniture rental
customers.  The Company had generally  distributed  houseware  amenity  packages
through third-party contractors either under subcontract  arrangements or direct
referrals. The Company continues to expand the distribution of its own houseware
amenity   packages  to  capture  profits   currently   realized  by  third-party
contractors.

The Company  provides  rental  specialty  furniture  for short term use at trade
shows and conventions through its trade show furnishings operation.  The Company
had operations in New Orleans and California.  The trade show services  business
expanded  through the  acquisition of three trade show  businesses in March 1997
and one trade show business in October 1998. The  combination of CORT's national
network with the  experience of these  organizations  should provide the Company
with a competitive advantage in the trade show and convention services business.

The Company established  Relocation Central, a website that provides information
about major cities such as apartment finders,  school systems,  movers and local
recreation for relocating  individuals.  Relocation Central provides the Company
with an additional  marketing tool while also providing valuable  information to
potential customers.

Operations

Lease Terms

The Company typically leases furniture to individuals and corporate accounts for
three-,  six- and twelve-month terms, which may be and often are extended by its
customers on a  month-to-month  basis.  Management  believes  that,  on average,
furniture  remains on lease for  approximately  nine months at a time.  Although
rental  contracts  may give the customer the option to purchase the  merchandise
rented,  only a small percentage of the Company's rental leases lead to customer
ownership.

The  Company's  strategy is to price rentals to recover the original cost of the
furniture over a ten-month rental "payout period."  However,  pricing and payout
periods often vary with the length of the leases. The Company frequently charges
a delivery fee and, in the absence of proof of insurance,  a waiver fee.  Within
general  company  guidelines,  each district has  discretion to set prices based
upon local market factors.

The Company may also require a customer  security deposit which will be returned
at the end of the  lease  upon  satisfactory  compliance  with the  terms of the
lease. The Company requires  applications from prospective  rental customers and
performs credit  investigations  before approving such applications.  In each of
the last five years,  the Company's bad debt losses have been limited to 0.7% of
revenue or less.

                                      -4-

<PAGE>

Customer Services

CORT is dedicated  to  providing  consistently  high  quality  customer  service
nationwide  to its  corporate  and  individual  customers.  Through its national
network,  the  Company  more  efficiently  services  its  corporate  clients  by
providing a single point of contact for  customers who have  furniture  needs in
multiple locations,  offering consistent quality of products and services at all
CORT  locations,  and offering a broad spectrum of products to customers.  Under
its Personal Service  Guaranty,  the Company ensures customers of CORT Furniture
Rental that they will be satisfied  with the furniture  they rent or the Company
will exchange it for similar furniture within two business days, free of charge.
Additionally,  the Company's  employees  assist  customers with space  planning,
interior design and apartment location services.

Furniture Sales

For the last five years,  the Company  has  derived 71% of its  furniture  sales
revenue from clearance  centers sales. The remaining  furniture sales revenue is
derived  primarily from lease  conversions and sales of new furniture.  Sales of
rental  furniture  allow the Company to control  inventory  levels and  maintain
showroom quality of rental  inventory.  On average,  furniture is typically sold
through the  clearance  centers  three  years after its initial  purchase by the
Company.  For the  last  five  years,  sales of  rental  furniture  through  the
clearance  centers have had an average  recovery  margin on the original cost of
furniture of approximately 108%, at a price which is usually  considerably lower
than the price of  comparable  new  merchandise.  Management  believes  that its
ability to recover the  original  cost of its  furniture  through its  clearance
centers is a key contributor to the Company's profitability.

Sales, Marketing and Advertising

The  Company  employs  a sales  force of  approximately  900  people,  including
managers and supervisors,  rental  consultants,  commercial account  executives,
residential  account  executives,  and clearance center  personnel.  In general,
rental consultants  service walk-in showroom  customers,  clearance center sales
personnel are responsible for walk-in  clearance center customers and commercial
and  residential  account  executives  work to develop  office  and  residential
customers  in their  markets.  Utilizing  the  Company's  national  distribution
network to emphasize its ability to serve customers  throughout the country, the
Company employs fourteen  national account  representatives  who are responsible
for customers with business in more than one district.

CORT's sales representatives  receive professional,  business-to-business  sales
training through the Company's CORT University  program,  which was developed as
part of the Company's  continuing  effort to increase rental revenue and improve
customer service.  Management  believes that the program's emphasis on a problem
solving,  value-added approach to clients' needs enhances its relationships with
customers  and  provides  CORT with a  competitive  advantage  in  marketing  to
corporate customers.

The Company markets its services  through  brochures,  newspapers,  periodicals,
yellow pages, radio,  television and direct response media and over the internet
(http://www.cort1.com and http://www.relocationcentral.com). The Company designs
its marketing program both to promote the business and to increase  awareness of
the advantages of renting in the residential and office furniture markets.

Purchasing and Distribution

The Company has a national product line chosen by its merchandising  group. Each
district  manager,  in  consultation  with  his  or her  regional  merchandising
manager, selects from the national product line based on an analysis of customer
demand within such manager's specific market. Each district then places purchase
orders directly with the Company's  vendors and shipment is arranged through the
Company's freight analyst directly to the district warehouse.

The Company acquires  furniture from a large number of manufacturers  and is not
dependent on any  particular  manufacturer  as a source of supply.  In 1998,  no
furniture  manufacturer  accounted for more than 10% of the Company's  furniture
purchases. Management believes that the Company is able to purchase furniture at
lower  prices  than its  competitors  due to the  centralized  selection  of its
product line and large  volume of  purchases.  The Company is generally  able to
obtain prompt  delivery of furniture from its suppliers and has not  experienced
significant  interruptions  in its business  resulting  from delays in acquiring
furniture.

                                      -5-

<PAGE>

Merchandise is delivered to rental  customers by Company  employees via owned or
leased trucks after a rental agreement has been signed.  At the end of the lease
term,  rental  furniture  is returned to the  Company's  warehouses  where it is
inspected,  cleaned and/or repaired in preparation for future rental or sale. If
it is determined  that the furniture is appropriate  for sale rather than future
rental,  the  furniture  is then  transferred  to a  clearance  center.  Company
warehouses are typically  located next to a clearance  center,  thereby allowing
the Company to reduce shipping expenses and realize efficiency gains.

Competition

The   "rent-to-rent"   segment  of  the  furniture  rental  industry  is  highly
competitive.  Management believes that Aaron Rents, Globe Business Resources and
Brook  Furniture  Rental are the  Company's  most  significant  competitors.  In
addition, there are numerous smaller regional and local "rent-to-rent" furniture
companies  as well as  retailers  offering  residential  and  office  furniture.
Management  believes  that the  principal  competitive  factors in the furniture
rental  industry are product  value,  furniture  condition,  extent of furniture
selection,  terms of rental agreement,  speed of delivery,  exchange  privilege,
option to purchase, deposit requirements and customer service level.

With respect to sales of furniture  through its clearance  centers,  the Company
competes  with  numerous  used and new  furniture  retailers,  some of which are
larger  than  the  Company  and have  greater  financial  resources.  Management
believes  that  price and value are the  principal  competitive  factors  in its
furniture sales.

Employees

On December 31, 1998, the Company employed  approximately  2,700 people, of whom
approximately  106 were employed at corporate  headquarters.  Approximately  900
people  were  employed  as  salespersons,  1,500  people  were  employed  in the
warehouse and distribution portion of the business and the remainder in district
and regional administrative positions.

The Company's  warehouse and delivery  employees in Maryland  (approximately  49
persons) are represented by an independent  union under a contract which expires
in December  1999.  Additionally,  16 of the  Company's  warehouse  and delivery
employees in New York City are represented by the Local 840 of the International
Brotherhood of Teamsters under a contract which expires in June 1999.

The Company believes that its relationships with its employees are good.

Trademarks and Name Recognition

The  Company  engages in  business  primarily  under the CORT  Furniture  Rental
tradename,  which has been used in the  furniture  rental  business  for over 20
years.  The  Company has  established  its  reputation  as a provider of quality
furniture  and  customer  service  using  this  name.  The  Company  feels  that
reputation and name recognition are important to customers. Therefore, following
an  acquisition  in a new market,  the Company may use a combination of the CORT
and acquired  business  name to maintain  customer  recognition  for a period of
time.

Regulatory Matters

Compliance  with  Federal,  state  and  local  laws  and  regulations  governing
pollution  and  protection  of the  environ-ment  is not  expected  to have  any
material  effect upon the  financial  condition or results of  operations of the
Company.

Subsequent Event

On March 25, 1999 the Company entered into an Agreement and Plan of Merger among
the Company,  CBF Holding LLC, a Delaware  limited  liability  company,  and CBF
Mergerco  Inc., a Delaware  corporation.  Pursuant to the Merger  Agreement,  an
investor group that includes Bruckmann, Rosser, Sherrill & Co., Inc. ("BRS") and
members  of  the  Company's   management  team  will  acquire  the  Company  for
consideration  of $24.00  per  share in cash and $2.50 per share in  liquidation
value of a new series of preferred stock. Citicorp Venture Capital, Ltd. ("CVC")
will retain a portion of its investment and thereby provide equity  financing to
the resulting corporation.

The merger  agreement  requires  approval  by the  holders of a majority  of the
Company's  voting stock and, in addition,  approval by the holders of a majority
of the  outstanding  voting stock who are not affiliated  with BRS, CVC or other
members of the investor group.  The merger is also subject to other  conditions,
including  receipt  of  necessary  financing,  a  limitation  on the  number  of
dissenting  shareholders and certain regulatory approvals.  The merger agreement
will terminate if the investor group has not obtained  customary  commitment and
highly  confident  letters to provide the required debt financing  within thirty
days after the date of the merger agreement.  There can be no assurance that the
merger will be completed, or that the merger will be completed as contemplated.

                                      -6-
<PAGE>

ITEM 2.  Properties

As of December 31, 1998, the Company carried out its rental, sales and warehouse
operations  through 277 facilities,  of which 20 were owned and 257 were leased.
The leased  facilities have lease terms with expiration  dates ranging from 1999
to 2014. Upon the expiration of its leases,  the Company generally has been able
to either  extend  its  leases  or obtain  suitable  alternative  facilities  on
satisfactory  terms.  Management seeks to locate properties in new markets where
rental,  clearance and warehouse operations can be combined in one facility.  As
the  Company  expands  in a  particular  district,  the  Company  seeks  to open
free-standing  showrooms  and  clearance  centers  that  can  be  serviced  from
pre-existing  warehouses.  The Company's  showrooms  generally have 4,500 square
feet of  floor  space.  The  Company  regularly  reviews  the  presentation  and
appearance of its furniture  showrooms  and clearance  centers and  periodically
improves or refurbishes them to enhance their attractiveness to customers.

The Company's decision to enter a new market is based upon its review of current
demographic  information,  short-and  long-term  population and business  growth
projections and the level of existing competition.  Once the decision is made to
enter  a  new  market,  management  selects  individual  showroom  locations  by
reviewing demographic information, accessibility,  visibility, customer traffic,
location of competitors and cost.

The metropolitan  areas in which the Company operates,  together with the number
of showrooms in each metropolitan area, are set forth in the table below:

              District Locations                      Number of Showrooms
-----------------------------------------             -------------------
ALABAMA                     Birmingham                        1
                            Huntsville                        1
ARIZONA                     Phoenix                           2
ARKANSAS                    Little Rock                       1
CALIFORNIA                  Orange County                     2
                            Los Angeles                       6
                            Sacramento                        1
                            San Diego                         1
                            San Francisco                     5
                            Santa Clara                       2
COLORADO                    Denver                            2
DISTRICT OF COLUMBIA        (1)                               7
FLORIDA                     Ft. Lauderdale                    2
                            Jacksonville                      1
                            Miami                             2
                            Orlando                           3
                            Pensacola                         1
                            Tampa                             2
GEORGIA                     Atlanta                           6
ILLINOIS                    Chicago                           4
INDIANA                     Indianapolis                      3
KANSAS                      Kansas City                       1
KENTUCKY                    Louisville                        2
LOUISIANA                   Baton Rouge                       2
                            New Orleans                       1
MASSACHUSETTS               Boston                            3
MICHIGAN                    Ann Arbor                         1
                            Detroit                           4
                            Grand Rapids                      1
                            Kalamazoo                         1
                            Lansing                           1
MINNESOTA                   Minneapolis                       2
MISSOURI                    St. Louis                         1
NEVADA                      Las Vegas                         1
NEW JERSEY                  Kearny                            3
NEW MEXICO                  Albuquerque                       1
NEW YORK                    New York                          1
NORTH CAROLINA              Raleigh                           2
                            Charlotte                         2


                                       -7-

<PAGE>

              District Locations                      Number of Showrooms
-----------------------------------------             -------------------
OHIO                        Cincinnati                        2
                            Cleveland                         2
                            Columbus                          1
OKLAHOMA                    Oklahoma City                     1
                            Tulsa                             1
OREGON                      Portland                          1
PENNSYLVANIA                Philadelphia(2)                   4
                            Pittsburgh                        1
TENNESSEE                   Memphis                           1
                            Nashville                         1
TEXAS                       Austin                            1
                            Corpus Christi                    1
                            Dallas                            4
                            El Paso                           1
                            Houston                           4
                            San Antonio                       2
UTAH                        Salt Lake City                    1
VIRGINIA                    Richmond                          1
                            Virginia Beach                    1
WASHINGTON                  Seattle                           3
                                                            ---
   TOTAL                                                    119
----------
(1)  Includes locations in Washington, D.C., Maryland and Virginia.
(2)  Includes locations in Pennsylvania, New Jersey and Delaware.


The Company  distributes its furniture using a fleet of approximately 352 leased
and 47 company-owned delivery trucks. The trucks are usually rented for a period
of five to six  years  under  operating  leases  and  typically  display  CORT's
tradenames.


ITEM 3.  Legal Proceedings

At December 31,  1998,  the Company was  involved in certain  legal  proceedings
arising in the normal course of its business.  The Company  believes the outcome
of these matters will not have a material adverse effect on the Company.


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

None


ITEM 4a.  Directors and Executive Officers of the Registrant

The names of the executive  officers and directors of CORT and their  respective
ages and positions with CORT are set forth in the following table. Directors are
elected at the annual  meeting of  stockholders  to serve  until the next annual
meeting and until their successors are elected and qualify.

<TABLE>
<CAPTION>
Name                          Age       Position
----                          ---       --------
<S>                          <C>       <C>
Paul N. Arnold (3)            52      President, Chief Executive Officer & Director
Robert Baker                  44      Group Vice President--CORT Instant
Anthony J. Bellerdine         50      Senior Group Vice President
Michael G. Connors            42      Vice President--Real Estate
Charles M. Egan (3)           62      Chairman & Director
Kenneth W. Hemm               44      Executive Vice President & Chief Operating Officer - Division II
Steven D. Jobes               49      Executive Vice President & Chief Marketing Officer
Lloyd Lenson                  48      Executive Vice President & Chief Operating Officer - Division I
Victoria L. Stiles            44      Vice President--Human Resources & Corporate Risk Management
William Swets                 44      Vice President--Business Development
Maureen C. Thune              33      Vice President--Controller & Assistant Secretary
Frances Ann Ziemniak          48      Executive Vice President, Chief Financial Officer & Secretary
Keith E. Alessi (2)           44      Director
Bruce C. Bruckmann (1)(2)     45      Director
Michael A. Delaney(1)         44      Director
Gregory B. Maffei(2)          38      Director
James A. Urry (1)             45      Director
</TABLE>
----------
(1)  Member of Compensation Committee
(2)  Member of Audit Committee
(3)  Member of Directors Stock Option Committee

                                      -8-

<PAGE>

PAUL N. ARNOLD, President,  Chief Executive Officer and Director. Mr. Arnold has
been with CORT and Mohasco Corporation,  its former parent, for 30 years and has
held group management  positions within CORT since 1976. He has held his current
position  since July 1992.  He is also a Director of Town Sports  International,
Inc.

ROBERT BAKER, Group Vice  President--CORT/Instant.  Mr. Baker joined the Company
in August  1998 with the  acquisition  of certain  assets of  Instant  Interiors
Corporation.  Mr. Baker was the  co-founder  and  Chairman of Instant  Interiors
Corporation from 1978 until the acquisition.

ANTHONY J. BELLERDINE, Senior Group Vice President. Mr. Bellerdine has been with
CORT since July 1991. He was appointed to Senior Group Vice President in January
1999,  having  served as Group Vice  President,  Area Vice  President and Senior
District  Manager.  Prior to  joining  CORT,  Mr.  Bellerdine  was  Senior  Vice
President of Sales and Marketing of Stern Office Furniture for eight years.

MICHAEL G. CONNORS,  Vice  President--Real  Estate.  Mr.  Connors joined CORT in
February 1986,  after nearly eight years in Real Estate and Marketing with Mobil
Oil Corporation and has served in his current position since March 1991.

CHARLES M. EGAN,  Chairman and  Director.  Mr. Egan has been with CORT since the
acquisition of General  Furniture  Leasing  Company in September  1993. Mr. Egan
joined General  Furniture  Leasing  Company in 1989 and became its President and
Chief Executive  Officer in 1992. From 1985 to 1989, Mr. Egan was Executive Vice
President of Mohasco  Corporation.  Mr. Egan was  President of CORT from 1980 to
1985.

KENNETH W. HEMM,  Executive Vice President & Chief  Operating  Officer--Division
II. Mr. Hemm has been with CORT for 17 years.  He was appointed  Executive  Vice
President and Chief  Operating  Officer in January 1999,  having served as Group
Vice President, Group Manager and District Manager.

STEVEN D. JOBES,  Executive Vice President & Chief Marketing Officer.  Mr. Jobes
has been with CORT for 27 years and  served  as Group  Vice  President  and Vice
President-Marketing,   Merchandising,  Sales  and  National  Accounts  prior  to
assuming his current position in January 1999.

LLOYD LENSON,  Executive Vice President & Chief Operating  Officer--Division  I.
Mr. Lenson has been with CORT for 20 years serving in his current position since
January  1999.  He  previously  served  as  Group  Vice  President  and as  Vice
President--Marketing, Sales and Acquisitions.

VICTORIA  L.  STILES,  Vice   President--Human   Resources  and  Corporate  Risk
Management. Ms. Stiles joined CORT in November 1987, after nearly eight years in
Personnel  for  the  Hecht  Company,  a  division  of the May  Company.  She was
appointed  to Vice  President in July 1996,  having  served as Director of Human
Resources and Regional Manager of Human Resources.

WILLIAM  SWETS,  Vice  President--Business  Development.  Mr.  Swets  joined the
Company  in August  1998  with the  acquisition  of  certain  assets of  Instant
Interiors  Corporation.  Mr. Swets was the  co-founder  and President of Instant
Interiors Corporation from 1978 until the acquisition.

MAUREEN C. THUNE, Vice President--Corporate  Controller and Assistant Secretary.
Ms.  Thune  joined CORT in August  1992 after five years with KPMG Peat  Marwick
LLP, having most recently served as a Manager.

                                      -9-

<PAGE>

FRANCES ANN ZIEMNIAK,  Executive Vice  President,  Chief  Financial  Officer and
Secretary.  Ms.  Ziemniak has been with CORT since March 1995. She was appointed
to her current position in January 1999 having served as Vice  President-Finance
and  Chief  Financial  Officer.  Prior to  joining  CORT,  Ms.  Ziemniak  was an
independent  consultant  focusing  on  risk-management  and  retail  acquisition
analysis from 1992 to 1995. Ms. Ziemniak was previously Vice President,  Finance
and Chief Financial Officer for Federated Merchandising, a division of Federated
Department  Stores,  Inc.  from  1987  to 1992  and  Corporate  Vice  President,
Financial  Services for The GAP,  Inc.  from 1982 to 1987.  Before Ms.  Ziemniak
joined The GAP, Inc. in 1979, she was employed by Ernst & Young LLP.

KEITH E. ALESSI,  Director.  Mr. Alessi is currently President,  Chief Executive
Officer and Chairman of the Board of Directors of Telespectrum  Worldwide,  Inc.
Mr. Alessi was President and Chief Executive Officer of Jackson Hewitt Inc. from
June 1996 through March 1998. He was Vice Chairman and Chief  Financial  Officer
of Farm Fresh,  Inc. (which filed voluntary  bankruptcy as part of a sale of the
company in January 1998 and emerged from  bankruptcy in February 1998) from June
1994  through  June  1996.  He  had  previously   served  in  various  executive
capacities,  including President,  with Farm Fresh from 1988 to 1992. Mr. Alessi
was Chairman and Chief Executive  Officer of Virginia  Supermarkets,  Inc., from
1992 to 1994. He is also a Director of Town Sports International, Inc.

BRUCE C. BRUCKMANN,  Director.  Mr. Bruckmann is currently  Managing Director of
Bruckmann,  Rosser,  Sherrill & Co., Inc. Mr.  Bruckmann was a Vice President of
Citicorp  Venture  Capital Ltd.,  which is an affiliate of the Company,  through
1993 and a Managing  Director  from 1993 through  1994. He is also a Director of
AmeriSource  Health  Corporation,  Anvil Knitwear,  Inc.,  Chromcraft-Revington,
Inc.,  Jitney-Jungle  Stores  of  America,  Inc.,  MEDIQ,  Incorporated,  Mohawk
Industries,  Inc., Penhall  International,  Inc. and Town Sports  International,
Inc.

MICHAEL A. DELANEY,  Director.  Mr. Delaney is currently a Managing  Director of
Citicorp Venture Capital Ltd.,  which is an affiliate of the Company.  From 1989
through 1997, he was a Vice President of Citicorp  Venture Capital Ltd. and from
1986 through 1989 he was Vice  President of Citicorp  Mergers and  Acquisitions.
Mr. Delaney is also a Director of Allied Digital Technologies Corporation, Aetna
Industries,  Inc.,  AmeriSource  Health  Corporation,  CLARK  Material  Handling
Corporation, Delco Remy International,  Inc., Enterprise Media Inc., FabriSteel,
Inc., Great Lakes Dredge & Dock Corporation,  GVC Holdings, IKS Corporation, JAC
Holdings,  MSX International,  Inc., Palomar Technologies,  Inc., SC Processing,
Inc., and Triumph Group, Inc.

GREGORY  B.  MAFFEI,  Director.  Mr.  Maffei is the Chief  Financial  Officer of
Microsoft  Corporation.  He joined Microsoft in April 1993,  served as Treasurer
from 1994 to 1996 and Vice President,  Corporate  Development from 1996 to 1997,
and was promoted to Chief  Financial  Officer in July 1997. Mr. Maffei is also a
Director  of  Ragen  MacKenzie  Group  Inc.,  Skytel  Communications,  Inc.  and
Starbucks Corporation.

JAMES A.  URRY,  Director.  Mr.  Urry has been with  Citibank,  N.A.  since 1981
serving as a Vice President since 1986. He has been a Vice President of Citicorp
Venture  Capital Ltd.,  which is an affiliate of the Company,  since 1989. He is
also a Director of Airxcel, Inc.,  AmeriSource Health Corporation,  Brunner Mond
Holdings, CLARK Material Handling Corporation,  Hancor Holding Corporation,  IKS
Corporation, Palomar Products Inc., and York International Corporation.


                                      -10-

<PAGE>

                                     PART II

ITEM 5.  Market for Registrant's Common Equity and Related Stockholder Matters

The  information  required for this item is incorporated by reference to page 28
of the Company's 1998 Annual Report to Stockholders.


ITEM 6.  Selected Financial Data

The  information  required for this item is incorporated by reference to page 10
of the Company's 1998 Annual Report to Stockholders.


ITEM 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

The information  required for this item is incorporated by reference to pages 11
through 14 of the Company's 1998 Annual Report to Stockholders.

In addition to historic  information,  this Annual  Report on Form 10-K includes
certain forward-looking statements as such term is defined in Section 27A of the
Securities  Act and  Section  21E of the  Exchange  Act.  These  forward-looking
statements  involve  certain risks and  uncertainties,  including but limited to
acquisitions, additional financing requirements, development of new products and
services,  the effect of  competitive  products  and  pricing  and the effect of
general  economic  conditions,   that  could  cause  actual  results  to  differ
materially from those in such forward-looking statements.


ITEM 8.  Financial Statements and Supplementary Data

The  consolidated  balance  sheets of CORT  Business  Services  Corporation  and
subsidiary  as of  December  31,  1998 and 1997,  and the  related  consolidated
statements of operations,  stockholders'  equity, and cash flows for each of the
years in the  three-year  period  ended  December 31, 1998 are  incorporated  by
reference  to pages  15  through  27 of the  Company's  1998  Annual  Report  to
Stockholders.


ITEM 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosures

No response to this Item is required.


                                      -11-

<PAGE>

                                    PART III

ITEM 10.  Directors and Executive Officers of the Registrant

The  information  required by Item 401 of Regulation  S-K is included in Part I,
Item 4a. Directors and Executive Officers of the Registrant.

Compliance With Section 16(a) of the Securities Exchange Act of 1934

     Based solely on review of the copies of the forms furnished to the Company,
or written  representations  that no form was required to be filed,  the Company
believes that during the fiscal year ended  December 31, 1998, all Section 16(a)
filing requirements applicable to its officers,  directors and beneficial owners
of more than ten percent of the Company's Common Stock were satisfied.


ITEM 11.  Executive Compensation

     The  following  table sets forth,  for the fiscal years ended  December 31,
1996, 1997, and 1998, certain  information  regarding the cash compensation paid
by the Company,  as well as certain other compensation paid or accrued for those
years,  to each of the five most highly  compensated  executive  officers of the
Company, in all capacities in which they served:

                           Summary Compensation Table
<TABLE>
<CAPTION>
                                                                               Long-Term
                                                                             Compensation
                                                                             ------------
                                 Annual Compensation                          Securities
                              --------------------------    Other Annual      Underlying       All Other
Name and Principal Position   Year    Salary    Bonus(1)   Compensation(2)      Options     Compensation(3)
---------------------------   ----   --------   --------   ---------------   ------------   ---------------
<S>                           <C>    <C>        <C>           <C>               <C>             <C>
Paul N. Arnold                1998   $248,125   $ 74,631            --          83,000          $10,577
  President & Chief           1997    233,750    233,750            --           4,500           11,754
  Executive Officer           1996    223,750    190,188            --           2,850           11,781

Kenneth W. Hemm               1998    148,633     34,857            --          31,000           23,935
  Executive Vice President    1997    142,625    100,716            --           3,500           23,939
  & Chief Operating Officer   1996    132,764     91,363            --           2,850           24,161
  --Division II

Steven D. Jobes               1998    130,665     33,248            --          31,000               --
  Executive Vice President    1997    125,140     87,723            --           3,500               --
  & Chief Marketing Officer   1996    119,287     82,427            --           2,850               --

Lloyd Lenson
  Executive Vice President    1998    142,400     32,500            --          31,000            5,994
  & Chief Operating Officer   1997    136,125     69,301            --           3,500            5,504
  --Division I                1996    129,988     74,964            --           2,850            5,193

Frances Ann Ziemniak          1998    131,286     33,406            --          25,500           19,667
  Executive Vice President,   1997    125,268     87,813            --           3,500           18,216
  Chief Financial Officer &   1996    120,400     83,196      $132,153           2,850           15,916
  Secretary
</TABLE>
----------
(1)  The  amounts  shown  consist  of cash  bonuses  earned in the  fiscal  year
     identified but paid in subsequent fiscal years.

(2)  In 1996, the Company made payments to reimburse  moving expenses  ($74,820)
     and to cover applicable taxes on reimbursed moving expenses ($57,333).

(3)  The Company maintains an investment and profit-sharing defined contribution
     retirement plan. All of the Company's employees are eligible to participate
     after one year of service.  The Company makes a matching  contribution as a
     percentage  of  the  employee  contributions.   The  Company  may,  at  its
     discretion,   make   additional   contributions   based  on  the  Company's
     performance.  The amounts shown include both the matching  contribution and
     the Company's  discretionary  payment on behalf of the named  executives in
     which all of the above, except Ms. Ziemniak, are fully vested. In addition,
     the  amounts  shown  include the amounts  allocated  to certain  management
     employees in the defined  contribution portion of the CORT Furniture Rental
     Supplemental  Executive  Retirement  Plan. The Company  contributes a fixed
     dollar amount per plan member with the total  contribution  allocated among
     all plan members on the basis of their age and years of service.

                                      -12-
<PAGE>

Stock Options

Options Granted

     The following table sets forth information  regarding stock options granted
under the 1995 Stock-Based Incentive  Compensation Plan (the "1995 Plan") during
the fiscal year 1998 to the named executive officers of the Company:

                              Option Grants in 1998
<TABLE>
<CAPTION>
                                      Individual Grants                                Potential Realizable
                       ----------------------------------------------                    Value at Assumed
                        Number of                                                     Annual Rates of Stock
                       Securities   Percent of Total                                    Price Appreciation
                       Underlying    Options Granted                                    for Option Term(2)
                         Options     to Employees in   Exercise Price   Expiration   -----------------------
Name                   Granted(1)      Fiscal Year       (per share)       Date          5%           10%
--------------------   ----------   ----------------   --------------   ----------   ----------   ----------
<S>                      <C>              <C>             <C>            <C>         <C>          <C>       
Paul N. Arnold           75,000           18.3%           $40.375        04/24/08    $1,904,372   $4,826,051
                          8,000            2.0             39.4375       05/12/08       198,416      502,826

Kenneth W. Hemm          25,000            6.1            $40.375        04/24/08       634,791    1,608,684
                          6,000            1.5             39.4375       05/12/08       148,812      377,119

Steven D. Jobes          25,000            6.1            $40.375        04/24/08       634,791    1,608,684
                          6,000            1.5             39.4375       05/12/08       148,812      377,119

Lloyd Lenson             25,000            6.1            $40.375        04/24/08       634,791    1,608,684
                          6,000            1.5             39.4375       05/12/08       148,812      377,119

Frances Ann Ziemniak     20,000            4.9            $40.375        04/24/08       507,832    1,286,947
                          5,500            1.3             39.4375       05/12/08       136,411      345,693
</TABLE>
----------
(1)  Options under the 1995 Plan are exercisable when vested.

(2)  Amounts  represent  hypothetical  gains  that  could  be  achieved  for the
     respective  options if exercised at the end of the option term. These gains
     are based on assumed rates of stock appreciation of 5% and 10%,  compounded
     annually  from  the date  the  respective  options  were  granted  to their
     expiration  date  and  are  not  presented  to  forecast   possible  future
     appreciation,  if any, in the Common Stock. The potential realizable values
     shown are net of the option exercise price,  but do not include  deductions
     for taxes or other expenses  associated with the exercise of the options or
     the sale of the underlying shares. The actual realizable values, if any, on
     the stock option  exercises  will depend on the future  performance  of the
     Common  Stock,  the  optionee's  continued  employment  through  applicable
     vesting periods and the date on which the options are exercised.


                                      -13-

<PAGE>

     The following table sets forth  information  regarding 1998 year-end option
values for the named executive officers of the Company:

      Aggregated Options Exercised in 1998 and 1998 Year-End Option Values
<TABLE>
<CAPTION>
                                             Number of Securities        Value of Unexercised
                       Shares               Underlying Unexercised       In-the-Money Options  
                      Acquired            Options at Fiscal Year End      at Fiscal Year End    
                         on       Value   --------------------------  --------------------------
Name                  Exercise  Realized  Exercisable  Unexercisable  Exercisable  Unexercisable
--------------------  --------  --------  -----------  -------------  -----------  -------------
<S>                      <C>       <C>      <C>            <C>         <C>             <C>   
Paul N. Arnold           --        --       177,856        86,950      $2,865,200      $3,325
Kenneth W. Hemm          --        --        61,850        34,283         981,033       3,325
Steven D. Jobes          --        --        72,279        34,283       1,313,326       3,325
Lloyd Lenson             --        --        71,574        34,283       1,289,656       3,325
Frances Ann Ziemniak     --        --        46,497        28,783         687,807       3,325
</TABLE>

Supplemental Executive Retirement Plan

     The CORT Furniture Rental Supplemental Executive Retirement Plan (the "SERP
Plan")  provides a  supplement  to the  retirement  benefits  that  certain  key
management  employees  will  receive from the  Retirement  Plan for Salaried and
Sales  Employees  of  Mohasco  Corporation  (the  "Mohasco  Plan")  and the CORT
Furniture  Rental  Investment  Savings and Profit Sharing  Retirement  Plan (the
"401(k)  Plan").  The SERP Plan consists of a defined benefit plan and a defined
contribution plan.

     Certain key management employees of the Company with at least five years of
service (employment) had been selected by the Board of Directors as participants
in the defined benefit  portion of the SERP Plan. Such officers  include Messrs.
Arnold,  Lenson and Jobes.  The  defined  SERP Plan  benefits  are a function of
service  with the  Company  and  Final  Average  Compensation  (average  monthly
compensation  during the 36 consecutive  months out of the last 60 months of the
participant's  employment  that  produce  the  highest  average).   Compensation
includes salary, bonuses and 401(k) Plan salary deferrals. Benefits are equal to
a targeted  percentage as determined by the Board of Directors upon selection of
the employee to participate in the SERP Plan--(55% in the case of Mr. Arnold and
50% in the case of Mr. Jobes and Mr.  Lenson) of the Final Average  Compensation
as of the date of the  participant's  retirement  or  termination  of employment
multiplied by the ratio of the  participant's  actual years of service as of the
applicable  event  to  the  participant's  years  of  service  projected  to the
participant's  Normal Retirement Date (first day of the month after the date the
participant  attains age 65). The benefits are reduced by (i) the annuity  value
of Company  contributions  made on behalf of the  participant to the 401(k) Plan
and (ii) the  annuity  benefit,  on a single  life  basis  only,  payable to the
participant under the Mohasco Plan.

     The  estimated  annual  benefits  payable upon  retirement,  expressed as a
straight life annuity, before reduction for the 401(k) Plan or the Mohasco Plan,
are as follows:

                            TARGETED PERCENTAGE: 55%

                                       Years of Service
                     ----------------------------------------------------
      Remuneration      15         20         25         30         35
      ------------   --------   --------   --------   --------   --------
        $125,000     $ 65,528   $ 65,528   $ 65,528   $ 65,528   $ 65,528
         150,000       78,634     78,634     78,634     78,634     78,634
         175,000       91,739     91,739     91,739     91,739     91,739
         200,000      104,845    104,845    104,845    104,845    104,845
         225,000      117,951    117,951    117,951    117,951    117,951
         250,000      131,056    131,056    131,056    131,056    131,056
         300,000      157,268    157,268    157,268    157,268    157,268
         400,000      209,690    209,690    209,690    209,690    209,690
         450,000      235,901    235,901    235,901    235,901    235,901
         500,000      262,113    262,113    262,113    262,113    262,113


                                    -14-

<PAGE>

                            TARGETED PERCENTAGE: 50%

                                       Years of Service
                     ----------------------------------------------------
      Remuneration      15         20         25         30         35
      ------------   --------   --------   --------   --------   --------
        $125,000     $ 59,571   $ 59,571   $ 59,571   $ 59,571   $ 59,571
         150,000       71,485     71,485     71,485     71,485     71,485
         175,000       83,399     83,399     83,399     83,399     83,399
         200,000       95,314     95,314     95,314     95,314     95,314
         225,000      107,228    107,228    107,228    107,228    107,228
         250,000      119,142    119,142    119,142    119,142    119,142
         300,000      142,971    142,971    142,971    142,971    142,971
         400,000      190,627    190,627    190,627    190,627    190,627
         450,000      214,456    214,456    214,456    214,456    214,456
         500,000      238,284    238,284    238,284    238,284    238,284


     As of December 31, 1998,  Mr. Arnold was credited with 30 years of service,
Mr. Jobes with 27 years of service and Mr. Lenson with 20 years of service.

     Other key management employees have been selected by the Board of Directors
as  participants  in the  defined  contribution  portion of the SERP Plan.  Such
officers include Mr. Hemm and Ms. Ziemniak.  Defined  contribution  benefits are
equal to the balance in an  executive's  SERP Account  (the annual  contribution
credited  to such  executive's  account,  adjusted to reflect  gains,  losses or
forfeitures incurred), as of the last day of the month in which the executive is
employed.

     A participant in either the defined benefit or defined contribution portion
of the SERP Plan whose  employment with the Company is terminated  without Cause
(i.e.,  other  than as a  result  of  willful  gross  misconduct  materially  or
demonstrably   injurious   to  the   Company  or  willful   refusal  to  perform
substantially  the  duties  reasonably   assigned  to  him/her)  or  who  has  a
substantial  reduction in duties and  responsibilities  or in compensation  will
vest immediately in his/her SERP Plan benefit.  In addition,  such a participant
(other than the Chief Executive  Officer) will be entitled to receive a lump sum
payment equal to the amount of compensation he/she received during the final six
or 12 months  based on  length  of  service  (12  months in the case of  Messrs.
Arnold, Hemm, Jobes and Lenson and six months in the case of Ms. Ziemniak) prior
to such event. The Chief Executive Officer is entitled to a severance payment of
twice this amount. Amounts paid by the Company under any employment agreement or
other  severance  arrangement  will reduce the severance  payment under the SERP
Plan. In addition,  the Company and Mr. Arnold have agreed that one-half of such
severance payment will be paid in a lump sum and the remaining half will be paid
in eighteen  equal monthly  installments  commencing one month after the date of
his  termination.  Each  participant  in the SERP Plan has agreed not to compete
with the Company for a period of 18 months  following the termination of his/her
employment with the Company unless such participant's  employment was terminated
without Cause.

Director's Compensation

     Directors  who are not  employees  of the  Company or CVC receive a monthly
payment of $1,000, $500 for attendance at each meeting of the Board of Directors
and $500 for attendance at each meeting of a committee of the Board of Directors
and are  reimbursed  for expenses  incurred in  connection  with  attendance  at
meetings of the Board of Directors or committees thereof. In addition, directors
not  employed by the Company are  entitled to receive  options for Common  Stock
pursuant to the 1997 Directors Stock Option Plan (the "Directors Plan").

     The Company adopted the Directors Plan,  which provides for the granting of
stock  options on a  non-discretionary  basis to  non-employee  directors of the
Company.  An aggregate of 50,000  shares of Common Stock have been  reserved for
issuance  under the Directors  Plan.  The Directors  Plan provides for automatic
grants of  options  to  purchase  2,000  shares  of Common  Stock to each of the
Company's  non-employee  directors on the business day immediately following the
Company's  annual meeting of  stockholders in calendar years 1997,  1998,  1999,
2000 and 2001, which options will become  exercisable over a three-year  period.
The  option  exercise  price is equal  to 100% of the fair  market  value of the
Common  Stock on the date of grant of the option.  Options  granted to directors
under the Directors Plan will be treated as nonstatutory stock options under the
Internal  Revenue Code, as amended.  The Company  granted 10,000 options in 1998
pursuant to the terms of the Directors Plan.


                                      -15-
<PAGE>

Change of Control Agreements

     CORT has entered into change of control  agreements with several  executive
officers.  These agreements  terminate one year from March 25, 1999, the date on
which they were entered.  Under the agreement with Chief Executive  Officer Paul
Arnold,  in the event of a change of control  (as defined in the  agreement)  of
CORT,  Mr. Arnold will receive a cash payment within three days after the change
of control in the amount of  $1,200,000.  In  addition  to the  payment,  if Mr.
Arnold is terminated by the Company within one year of a change of control other
than for cause or by Mr. Arnold for "good reason," as these terms are defined in
the  agreement,  Mr.  Arnold is entitled to a  continuation  of certain  welfare
benefits  for three years after his  termination  at the same cost and  coverage
level as in effect on his date of termination.  Other executives are entitled to
payments  in  amounts  of either  $150,000  or  $400,000  in the event  they are
terminated by the Company  within one year of a change of control other than for
cause or by them for "good reason." These  executives also would receive welfare
benefits for three years after their  termination  at the same cost and coverage
level as in effect on their dates of termination.

     In addition, pursuant to a Change of Control Bonus Plan, certain management
employees are eligible for payments if they are terminated  within one year of a
change of  control  by the  Company  other  than for cause or by the  management
employee for "good reason," as defined in the plan. The Compensation  Committee,
in its sole  discretion,  shall  determine  the amount of the  payment,  if any,
payable  to each  management  employee  on or  before  the date of a  change  of
control.  The aggregate  amount of all payments  under the plan shall not exceed
$400,000.

     The Agreement  and Plan of Merger  discussed in Item 1 will not result in a
change of control under the change of control agreements or the plan.

Compensation Committee Interlocks and Insider Participation

     The   Compensation   Committee   reviews  and  approves  salary  and  other
compensation of officers and administers certain benefit plans. The Compensation
Committee  also has the authority to  administer,  grant and award stock options
under the Corporation's stock option plans. Current members of the Committee are
Messrs. Urry, Chairman; Bruckmann, and Delaney.

Report of the Compensation Committee of the Board of Directors
on Executive Compensation

     Role of  Committee.  The  Compensation  Committee of the Board of Directors
(the  "Committee")  establishes,  oversees and directs the  Company's  executive
compensation  programs and policies and  administers  the Company's stock option
plans.  The  Committee  seeks  to  align  executive  compensation  with  Company
objectives and strategies,  management programs,  business financial performance
and enhanced  stockholder value. The Committee  consists of independent  outside
directors, none of whom is or was an officer or employee of the Company or CFR.

     The Committee's objectives include (i) attracting and retaining exceptional
individuals  as  executive  officers  and (ii)  providing  key  executives  with
motivation  to perform  to the full  extent of their  abilities  in an effort to
maximize  Company  performance  to  deliver  enhanced  value  to  the  Company's
stockholders.  The  Committee  believes  it is  important  to  place  a  greater
percentage  of  executive  officers'   compensation  at  risk,  as  compared  to
non-executives,  by  tying  compensation  directly  to  the  performance  of the
business  and  value  of the  Common  Stock.  Executive  compensation  generally
consists of (i) a base salary,  (ii) a cash bonus  opportunity that is linked to
the performance of the Company and (iii) long-term equity-based compensation.

     Compensation.  The annual  salaries and bonuses of the Company's  executive
officers  are  set  at  levels  designed  to  attract  and  retain   exceptional
individuals  by rewarding  them for  individual  and Company  achievements.  The
Committee  reviews  the  annual  salary and bonus of each  executive  officer in
relation to such officer's  performance  and previous  compensation  and general
market and industry conditions or trends and makes appropriate adjustments.  The
Committee reviews each executive officer's salary annually to determine if it is
appropriate  to adjust  such  salary  based on various  factors  including  each
executive  officer's past  performance  and expected future  contributions,  the
scope   and   nature   of   responsibilities,    including   changes   in   such
responsibilities,  and competitive  compensation data relating to each executive
officer.

                                      -16-

<PAGE>

     The  Committee  believes  that a portion  of the  executives'  compensation
should  be tied to the  financial  results  of the  Company  in order to  reward
individual performance and overall Company success. Each year, objective targets
are established for each officer.  Such targets include the Company's  financial
targets,  such as revenue,  earnings and return on assets, as well as individual
strategic and operating targets. Additionally, a portion of each officer's bonus
is  based  on  subjective  criteria  particular  to  each  officer's  individual
operating  responsibilities.  In 1998,  the Company and the  executive  officers
exceeded  certain  goals  established  by the  Committee.  Accordingly,  Messrs.
Arnold,  Hemm,  Jobes and  Lenson  and Ms.  Ziemniak  earned a portion  of their
bonuses which was attributable to their respective targets and objectives.

     The Company has employee stock option plans in order to offer key employees
the opportunity to acquire an equity interest in the Company,  thereby  aligning
the interests of these  employees  more closely with the long-term  interests of
stockholders.  Awards under these employee stock option plans may be in the form
of options,  deferred stock,  restricted stock or stock appreciation  rights. In
1998, the Company  granted  standard  stock options and  performance-accelerated
stock  options to the  Company's  executive  officers.  All such options have an
exercise  price  equal to the market  value of the  Common  Stock on the date of
grant.  The  standard  stock  options  vest  over  a  three-year   period.   The
performance-accelerated  options  vest  seven  years  from  the  date of  grant;
however, the vesting of the  performance-accelerated  options can be accelerated
upon achievement of specified goals relating to the Common Stock price.

     1998 Chief Executive  Officer  Compensation.  The Committee  determined the
1998  compensation  of Mr. Arnold,  President and Chief  Executive  Officer,  in
accordance  with the above  discussion.  In addition,  the  Committee  based Mr.
Arnold's bonus on his overall leadership and management of the Company.

     Deductibility of Compensation.  Section 162(m) of the Internal Revenue Code
imposes  a $1  million  limit  on the  deductibility  of  compensation  paid  to
executive  officers of public companies.  The Committee believes that all of the
compensation   awarded  to  the  Company's  executive  officers  will  be  fully
deductible in accordance with this limit.

                                        COMPENSATION COMMITTEE
                                        James A. Urry, Chairman
                                        Bruce C. Bruckmann
                                        Michael A. Delaney






                                      -17-

<PAGE>

Stockholder Return Performance Graph

     The following  graph  compares the  percentage  change in cumulative  total
stockholder  return on the Company's  Common Stock against the cumulative  total
return of the Standard & Poor's 500 Index and the Dow Jones Other Industrial and
Commercial Services Index from the initial public offering price on November 17,
1995 to December 31, 1998.  Cumulative  total return to stockholders is measured
by dividing (x) the sum of (i) total dividends for the period (assuming dividend
reinvestment)  plus (ii) per-share  price change for the period by (y) the share
price at the  beginning of the period.  The graph is based on an  investment  of
$100 at the initial  public  offering  price on November  17, 1995 in the Common
Stock and in each index.


                COMPARISON OF 37 MONTH CUMULATIVE TOTAL RETURN*

         AMONG CORT BUSINESS SERVICES CORPORATION, THE S & P 500 INDEX
         AND THE DOW JONES OTHER INDUSTRIAL & COMMERCIAL SERVICES INDEX


                               [GRAPHIC OMITTED]



                                      -18-

<PAGE>

ITEM 12.  Security Ownership of Certain Beneficial Owners and Management

     The  following  table  sets  forth  certain  information  with  respect  to
beneficial  ownership  of Common  Stock as of April 15,  1999 by (i) each of the
Company's directors and certain of its executive officers,  (ii) each person who
is known by the Company to own beneficially more than 5% of the Company's Common
Stock and (iii) by all of the Company's  directors  and executive  officers as a
group. The Company owns all of the issued and outstanding  capital stock of CORT
Furniture Rental Corporation (CFR).

                                                     Common Stock(1)
                                          --------------------------------------
                                          Number of Shares   Percentage of Class
                                          ----------------   -------------------
Directors:
  Paul N. Arnold .......................      209,429(2)             1.6%
  Bruce C. Bruckmann ...................      182,506(2)             1.4%
  Keith E. Alessi ......................       51,660(2)              *
  Gregory B. Maffei ....................       42,526(2)              *
  Charles M. Egan ......................       31,382(2)              *
  James A. Urry ........................       13,934(2)              *
  Michael A. Delaney ...................       10,501(2)              *
Certain Executive Officers:
  Lloyd Lenson .........................      122,987(2)              *
  Kenneth W. Hemm ......................       88,916(2)              *
  Steven D. Jobes ......................       78,796(2)              *
  Frances Ann Ziemniak .................       71,475(2)              *
Five Percent Stockholders:(3)
  Citicorp Venture Capital, Ltd.(4) ....    5,778,518               44.1%
    399 Park Avenue, 14th Floor
    New York, New York 10043
  T. Rowe Price Associates, Inc.(5) ....
    100 E. Pratt Street                     1,366,400               10.4%
    Baltimore, MD  21202
All Directors and Executive Officers
  as a group (17 persons) ..............      983,610(2)             7.2%
----------
 *   Less than 1%.

(1)  The  Company  has two  authorized  classes of common  stock:  Common  Stock
     (voting) and Class B Common Stock  (nonvoting).  There are 4,350,411 shares
     of the Company's Class B Common Stock issued and outstanding (see note 4).

(2)  Includes   shares  under  option  which  are  exercisable  or  will  become
     exercisable  within 60 days of April 15,  1999 of  182,023;  8,001;  3,667;
     9,001; 16,068;  8,001; 8,001; 74,741;  65,017;  75,446;  49,498 for Messrs.
     Arnold, Bruckman,  Alessi, Maffei, Egan, Urry, Delaney, Lenson, Hemm, Jobes
     and Ms. Ziemniak,  respectively, and 572,044 in total for all Directors and
     Executive Officers as a group.

(3)  The Board of Directors and  Management are not aware of any other person or
     entity who holds  beneficially more than 5% of the outstanding Common Stock
     of the Corporation.

(4)  Includes  4,350,411  shares of Class B Common Stock,  which is  convertible
     into Common Stock.

(5)  These  securities  are  owned  by  various   individual  and  institutional
     investors  including T. Rowe Price Small Cap Value Fund,  Inc.  (which owns
     670,000 shares, representing 5.1% of the shares outstanding), which T. Rowe
     Price Associates, Inc. ("Price Associates") serves as an investment adviser
     with power to direct  investments and/or sole power to vote the securities.
     For the purposes of the reporting  requirements of the Securities  Exchange
     Act of 1934,  Price  Associates is deemed to be a beneficial  owner of such
     securities;  however,  Price Associates  expressly disclaims that it is, in
     fact, the beneficial owner of such securities.


Changes in Control

     The information  required by Item 403 of Regulation S-K is included in Part
I, Item 1 Business - Subsequent Event.


ITEM 13.  Certain Relationships and Related Transactions

None.


                                      -19-

<PAGE>

                                     PART IV

ITEM 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) and (d)  Financial Statements and Schedules (see Index on Page F-1)

(b)          Reports on Form 8-K

             No reports on  Form 8-K have been filed  during the last quarter of
             the period covered by this report.

(c)          Exhibits (see Index on Page E-1)









                                      -20-

<PAGE>

                CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY

                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                        CORT BUSINESS SERVICES CORPORATION


                                        By:  /s/  Frances Ann Ziemniak
                                             -----------------------------------
                                                  Frances Ann Ziemniak
                                                  (Principal financial officer)


                                        By:  /s/  Maureen C. Thune
                                             -----------------------------------
                                                  Maureen C. Thune
                                                  (Principal accounting officer)


Date:  April 29, 1999

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated.

       Signatures                          Title                       Date
       ----------                          -----                       ----

/s/  Paul N. Arnold          President, Chief Executive Officer   April 29, 1999
-------------------------    (principal executive officer) and
     Paul N. Arnold          Director 

/s/  Charles M. Egan         Chairman and Director                April 29, 1999
-------------------------
     Charles M. Egan

/s/  Frances Ann Ziemniak    Executive Vice President, Chief      April 29, 1999
-------------------------    Financial Officer and Secretary
     Frances Ann Ziemniak

/s/  Keith E. Alessi         Director                             April 29, 1999
-------------------------
     Keith E. Alessi

/s/  Bruce C. Bruckmann      Director                             April 29, 1999
-------------------------
     Bruce C. Bruckmann

/s/  Michael A. Delaney      Director                             April 29, 1999
-------------------------
     Michael A. Delaney

/s/  Gregory B. Maffei       Director                             April 29, 1999
-------------------------
     Gregory B. Maffei

/s/  James A. Urry           Director                             April 29, 1999
-------------------------
     James A. Urry


                                      -21-

<PAGE>


                          INDEX TO FINANCIAL STATEMENTS

                                                                            Page
                                                                            ----
Financial Statements ......................................................   13

Financial Statement Schedules:

Schedule I - Condensed Financial Information of Registrant ................  S-1

Schedule II - Valuation and Qualifying Accounts ...........................  S-3









                                      F-1

<PAGE>

Exhibit
 Number                             Description                             Page
-------    --------------------------------------------------------------   ----
  2.1      Agreement  and Plan of  Merger,  dated as of March  25,  1999,
           among the  Company,  CBF Holding LLC and CBF  Mergerco,  Inc.;
           incorporated  by reference to Exhibit 2.1 the  Company's  Form
           8-K, filed on March 29, 1999.

  3.1      Restated   Certificate  of   Incorporation   of  the  Company;
           incorporated by reference to Exhibit 3.1 to Amendment No. 3 to
           the Company's Registration Statement on Form S-1, No. 33-97568
           filed on November 13, 1995

  3.2      Amendment   to   Restated    Certificate   of   Incorporation;
           incorporated  by  reference  to  Appendix  A to the  Company's
           Definitive  Proxy Statement on Schedule 14A, filed as of March
           31, 1997

  3.3      By-laws of the Company;  incorporated  by reference to Exhibit
           3.2 to Amendment No. 3 to the Company's Registration Statement
           on Form S-1, No. 33-97568 filed on November 13, 1995

 10.1      Credit  Agreement  dated as of February  13, 1998 by and among
           CFR,  the  Company,   the  lenders  identified  therein,   and
           NationsBank,  N.A.,  as agent;  incorporated  by  reference to
           Exhibit 10.1 to the  Company's  Annual Report on Form 10-K for
           the fiscal year ended December 31, 1997

 10.2      Stock Option,  Securities Purchase and Stockholders Agreement,
           dated as of January 18, 1994,  by and among the Company,  CFR,
           Citicorp  Venture  Capital  Ltd. and certain  investors  named
           therein;  incorporated  by  reference  to  Exhibit  4.6 to the
           Company's  Registration  Statement on Form S-8, No.  33-72724,
           filed on December 9, 1993

 10.3      Amendment 1 to New Cort Holdings  Corporation  and  Subsidiary
           Employee  Stock Option and Stock  Purchase  Plan as adopted by
           the Board of  Directors  of the Company on December  21, 1993;
           incorporated  by  reference  to Exhibit  10.11 to CFR's Annual
           Report on Form 10-K for the  fiscal  year ended  December  31,
           1993

 10.4      New Cort Holdings  Corporation  and Subsidiary  Employee Stock
           Option and Stock  Purchase  Plan (1995 Plan  Distribution)  as
           adopted by the Board of  Directors  of the Company on December
           16, 1994;  incorporated by reference to Exhibit 10.13 to CFR's
           Quarterly  Report on Form 10-Q for the  fiscal  quarter  ended
           June 30, 1995

 10.5      Form of First Amendment to Stockholders Agreement, dated as of
           November 13, 1995, by and among the Company,  Citicorp Venture
           Capital   Ltd.,   and   certain   investors   named   therein;
           incorporated  by reference to Exhibit 10.5 to Amendment  No. 3
           to the Company's Registration Statement on Form S-1, No.
           33-97568 filed on November 13, 1995

 10.6      Registration  Rights  Agreement for Common Stock,  dated as of
           January 18, 1994, by and among the Company,  Citicorp  Venture
           Capital Ltd. and certain investors named therein; incorporated
           by reference to Exhibit 10.4 to the Company's Quarterly Report
           on Form 10-Q for the fiscal quarter ended March 31, 1994


                                      E-1

<PAGE>

Exhibit
 Number                             Description                             Page
-------    --------------------------------------------------------------   ----
 10.7      CFR's  Supplemental  Executive  Retirement Plan, dated October
           28,  1992,  as revised  effective  January  1, 1993,  restated
           through the Second  Amendment;  incorporated  by  reference to
           Exhibit 10.8 to the  Company's  Annual Report on Form 10-K for
           the year ended December 31, 1996

 10.8      Agreement for  Irrevocable  Trust Under CORT Furniture  Rental
           Supplemental  Executive  Retirement  Plan, dated June 1, 1996,
           between  CFR  and  Mentor  Trust  Company;   incorporated   by
           reference to Exhibit 10.9 to the  Company's  Annual  Report on
           Form 10-K for the year ended December 31, 1996

 10.9      Letter Agreement, dated July 24, 1992, between CFR and Paul N.
           Arnold;  incorporated  by reference to Exhibit  10.16 to CFR's
           Registration  Statement  on Form S-1, No.  33-65094,  filed on
           June 25, 1993

 10.10     Letter Agreement,  dated August 18, 1993, between CFR and Paul
           N.  Arnold;  incorporated  by  reference  to Exhibit  10.26 to
           Amendment  No. 5 to the  Company's  Registration  Statement on
           Form S-1, No. 33-65094, filed on August 25, 1993

 10.11     Employment Agreement, dated September 1, 1994, between CFR and
           Charles M. Egan; incorporated by reference to Exhibit 10.10 to
           CFR's Annual  Report on Form 10-K for the year ended  December
           31, 1994

 10.12     Amended and Restated CORT Business  Services  Corporation 1995
           Directors  Stock Option Plan adopted by the Board of Directors
           October 18, 1995 and  amended  and  restated on May 14,  1997;
           incorporated  by reference to Exhibit  10.13 to the  Company's
           Quarterly  Report on Form 10-Q for the  fiscal  quarter  ended
           June 30, 1997

 10.13     Equity  Share  Agreement,  between CFR and Lloyd and Eileen S.
           Lenson,  dated April 20,  1994;  incorporated  by reference to
           Exhibit 10.17 to the Company's  Registration Statement on Form
           S-1, No. 33-97568 filed on September 29, 1995

 10.16     Amended and Restated CORT Business  Services  Corporation 1995
           Stock  Based  Incentive  Compensation  Plan as  adopted by the
           Board of  Directors  on July 25, 1995 and amended and restated
           on May 14, 1997; incorporated by reference to Exhibit 10.17 to
           the  Company's  Quarterly  Report on Form 10-Q for the  fiscal
           quarter ended June 30, 1997

 10.17     CORT Business Services Corporation 1997 Directors Stock Option
           Plan,  as adopted by the  stockholders  of the  Company at the
           Annual Meeting of Stockholders  on May 14, 1997;  incorporated
           by reference to Appendix C to the Company's  Definitive  Proxy
           Statement on Schedule 14A, filed as of March 31, 1997

 11.1      Statement re computation of per share  earnings;  incorporated
           by reference to page 25 of the Company's 1998 Annual Report to
           stockholders

 13.1      Portions of the  Annual Report  of the Company  for the fiscal
           year ended December 31, 1998  which are expressly incorporated
           by reference herein

 21.1      List of Subsidiaries

 23.1      Consent of KPMG LLP

 27        Financial Data Schedules


                                      E-2

<PAGE>

                CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY

           SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                 (in thousands)


Condensed Balance Sheets:

                                                            As of December 31,
                                                         -----------------------
                                                           1997           1998
                                                         --------       --------
Investment in CORT Furniture Rental ..............       $149,332       $175,662
Other assets .....................................             --             --
                                                         --------       --------
    Total assets .................................        149,332        175,662
                                                         ========       ========
Accrued expenses .................................             --             --
Long-term debt ...................................             --             --
                                                         --------       --------
    Total liabilities ............................             --             --
Stockholders' equity .............................        149,332        175,662
                                                         --------       --------
    Total liabilities and equity .................       $149,332       $175,662
                                                         ========       ========


Condensed Statements of Operations:

                                                      Year Ended December 31,
                                                 -------------------------------
                                                   1996        1997        1998
                                                 -------     -------     -------
Equity in earnings of CORT Furniture
   Rental ..................................     $15,936     $22,326     $23,395
Interest expense ...........................          --          --          --
                                                 -------     -------     -------
    Income before income taxes .............      15,936      22,326      23,395
Income tax benefit .........................          --          --          --
                                                 -------     -------     -------
    Net income .............................     $15,936     $22,326     $23,395
                                                 =======     =======     =======



                                       S-1

<PAGE>


                CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY

           SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                   (CONTINUED)
                                 (in thousands)

<TABLE>
<CAPTION>
Condensed Statements of Cash Flows:
                                                         Year Ended December 31,
                                                     --------------------------------
                                                       1996        1997        1998
                                                     --------    --------    --------
<S>                                                  <C>         <C>         <C>     
Net income .......................................   $ 15,936    $ 22,326    $ 23,395
Adjustments to reconcile net income to cash flows
  from operating activities:
    Equity in earnings of CORT Furniture Rental ..    (15,936)    (22,326)    (23,395)
    Discount on junior subordinated debentures ...         --          --          --
    Interest converted to long-term debt .........         --          --          --
    Changes in assets and liabilities, net .......         --          --          --
                                                     --------    --------    --------
         Cash used in operating activities .......         --          --          --
                                                     --------    --------    --------
Cash flows from investing activities:
    Investment in CORT Furniture Rental ..........    (33,224)       (677)       (826)
                                                     --------    --------    --------
         Cash used in investing activities .......    (33,224)       (677)       (826)
                                                     --------    --------    --------
Cash flows from financing activities:
    Issuance of common stock .....................     33,224         677         826
    Net proceeds from issuance of long-term debt .         --          --          --
                                                     --------    --------    --------
         Cash provided by financing activities ...     33,224         677         826
                                                     --------    --------    --------
Net increase in cash and cash equivalents ........         --          --          --
Cash and cash equivalents at beginning of period .         --          --          --
                                                     --------    --------    --------
Cash and cash equivalents at end of period .......   $     --    $     --    $     --
                                                     ========    ========    ========
Supplemental disclosures of cash flow information:
    Tax benefit from exercise of stock options ...        571       1,177       2,109
</TABLE>


Note to Condensed Financial Statements of Registrant:

Basis of Presentation
---------------------

The accompanying  condensed financial  statements represent the accounts of CORT
Business Services Corporation on a stand-alone basis. Substantially all footnote
disclosures are omitted. Reference is made to the audited consolidated financial
statements and footnotes of CORT Business Services Corporation and subsidiary as
of  December  31,  1998 and 1997,  and for each of the  years in the  three-year
period ended December 31, 1998, which appear in the Company's 1998 Annual Report
to stockholders.


                                      S-2

<PAGE>

                CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                  Deductions
                                           Additions            -------------
                                    -----------------------      Write off of
Allowance for         Beginning     Charged to                  Uncollectible      Ending
Doubtful Accounts      Balance        Expense      Other(1)        Accounts       Balance
-----------------     ---------     ----------     --------     -------------     -------
<S>                    <C>             <C>            <C>          <C>             <C>  
December 31, 1996        938           1,234          334            (600)         1,906

December 31, 1997       1,906          2,107           --          (1,122)         2,891

December 31, 1998       2,891          1,710           --          (1,422)         3,179
</TABLE>
----------
(1)  Other  additions  represent  the  balance  of Evans  Rents'  allowance  for
     doubtful  accounts,  which was recorded April 24, 1996 in conjunction  with
     the acquisition.







                                      S-3