<PAGE>   1
                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

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

                  For the quarterly period ended JUNE 30, 1997

                                       OR

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

                         Commission File Number 33-81370

                               CENTRAL RENTS, INC.
             (Exact name of registrant as specified in its charter)


           Delaware                                          95-4476294
 (State or other jurisdiction of                         (I.R.S. Employer
 incorporation or organization)                          Identification No.)

                            5480 East Ferguson Drive
                           Commerce, California 90022
                    (Address of principal executive offices)

                                 (213) 720-8700
              (Registrant's telephone number, including area code)


Indicate by check mark whether Registrant (1) has filed all reports 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
                     ---    --- 

Number of shares outstanding as of August 13, 1997: 617,045

<PAGE>   2

                               CENTRAL RENTS, INC.

                                    FORM 10-Q

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                              Page No.
----------------------------------------------------------------------------------------------------------------------
<S>       <C>                                                                                                      <C>
PART I.                        FINANCIAL INFORMATION

Item 1.    Condensed Financial Statements:

           Condensed Balance Sheets at June 30, 1997 and December 31, 1996 ........................................ 1

           Condensed Statements of Operations for the Three and Six Months Ended June 30, 1997 and 1996 ........... 2

           Condensed Statements of Cash Flows for the Six Months Ended June 30, 1997 and 1996 ..................... 3

           Notes to Condensed Financial Statements  ............................................................... 4

Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations  ................. 6


PART II.                                          OTHER INFORMATION

Item 5.    Other Information  .....................................................................................10

Item 6.    Exhibits and Reports on Form 8-K .......................................................................10

Signatures ........................................................................................................11
</TABLE>



<PAGE>   3
PART I.    FINANCIAL INFORMATION

ITEM 1.    CONDENSED FINANCIAL STATEMENTS

                               CENTRAL RENTS, INC.

                            CONDENSED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                      June 30,    December 31,
                                                                        1997           1996
                                                                      --------    ------------
<S>                                                                      <C>         <C>     
                                     ASSETS
Cash and cash equivalents                                             $     --       $    883
Short-term investments                                                  10,950         11,925
Receivables and prepaid expenses                                         1,725          2,348
Income tax receivable - related party                                      830          1,871
Rental merchandise, net                                                 33,625         34,381
Property and equipment, net                                              3,693          2,527
Deferred financing costs, net                                            1,738          1,957
Non-compete agreement, net                                                  --          1,275
Excess of cost over net assets acquired, net                             6,736          6,861
Deferred income taxes, net                                               8,656          8,156
Other assets                                                               129            279
                                                                      --------       --------
     Total assets                                                     $ 68,082       $ 72,463
                                                                      ========       ========

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Accounts payable                                                      $  2,982       $  5,332
Accrued expenses                                                         6,218          5,682
Due to related parties                                                     423            237
Accrued interest                                                           322            322
Long-term notes                                                         58,231         58,094
                                                                      --------       --------
     Total liabilities                                                  68,176         69,667
                                                                      --------       --------
Commitments and contingencies Stockholders' equity (deficit):
     Preferred stock, $0.01 par value,
       100 shares authorized; no shares issued                              --             --
     Common stock, $0.01 par value, 2,000,000 shares authorized;
       617,045 and 551,045 shares issued and outstanding in 1997
       and 1996, respectively                                                6              6
     Additional paid-in capital                                         22,944         22,944
     Retained deficit                                                  (23,044)       (20,154)
                                                                      --------       --------
       Total stockholder equity (deficit)                                  (94)         2,796
                                                                      --------       --------
     Total liabilities and stockholders' equity (deficit)             $ 68,082       $ 72,463
                                                                      ========       ========
</TABLE>



                  See notes to condensed financial statements.


                                       1
<PAGE>   4

                               CENTRAL RENTS, INC.

                       CONDENSED STATEMENTS OF OPERATIONS
                       (THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>

                                                  Three Months Ended             Six Months Ended
                                                        June 30,                      June 30,
                                                -----------------------       -----------------------
                                                  1997           1996           1997          1996
                                                --------       --------       --------       --------
<S>                                             <C>            <C>            <C>            <C>     
Revenues                                        $ 26,394       $ 27,767       $ 53,130       $ 56,167

Costs and expenses:
     Selling, general and administrative          15,314         15,445         30,996         30,826
     Cost of merchandise sold                        866            912          1,965          1,979
     Depreciation and amortization -
       Rental merchandise                          7,789          8,082         15,449         16,730
       Property and equipment                        409            398            776            802
                                                --------       --------       --------       --------
                                                  24,378         24,837         49,186         50,337
                                                --------       --------       --------       --------
Income before interest, taxes and
amortization of intangibles                        2,016          2,930          3,944          5,830
                                                --------       --------       --------       --------

Amortization of intangibles                          594          1,599          1,411          3,497
                                                --------       --------       --------       --------

Income from operations                             1,422          1,331          2,533          2,333
Interest expense, net                              2,009          1,875          3,923          3,815
                                                --------       --------       --------       --------
Loss before income taxes                            (587)          (544)        (1,390)        (1,482)
Income tax benefit                                   211            175            500            495
                                                --------       --------       --------       --------
Net loss                                        $   (376)      $   (369)      $   (890)      $   (987)
                                                ========       ========       ========       ========
Per share data:

Net loss per common share                       $   (.61)      $   (.67)      $  (1.49)      $  (1.79)
                                                ========       ========       ========       ========

Weighted average common shares outstanding           617            551            596            551
                                                ========       ========       ========       ========
</TABLE>


                  See notes to condensed financial statements.



                                       2
<PAGE>   5

                               CENTRAL RENTS, INC.

                       CONDENSED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                              Six Months Ended
                                                                                 June 30,
                                                                         ------------------------
                                                                           1997           1996
                                                                         --------       --------
<S>                                                                      <C>            <C>      
Cash flows from operating activities:
     Net loss                                                            $   (890)      $   (987)
     Adjustments to reconcile net loss to net cash provided by
       operating activities:
         Depreciation of rental merchandise                                15,449         16,730
         Depreciation and amortization of property and equipment              776            802
         Amortization of intangibles                                        1,411          3,497
         Amortization of debt discount                                        137            137
         Amortization of deferred financing costs                             219            165
         Increase in deferred income taxes                                   (500)          (400)
     Changes in operating assets and liabilities:
         Decrease in receivables, prepaid expenses and other assets           762          1,353
         Increase in rental merchandise                                   (14,693)       (13,016)
         Decrease in income tax receivable - related party                  1,041            600
         Decrease in accounts payable                                      (2,350)        (7,367)
         Increase (decrease) in due to related parties                        186           (457)
         Increase in accrued expenses                                         536            733
                                                                         --------       --------
         Net cash provided by operating activities                          2,084          1,790
                                                                         --------       --------
Cash flows from investing activities:
     Purchase of property and equipment                                    (1,942)          (574)
     Sale (purchase) of short-term investments                                975           (594)
                                                                         --------       --------
     Net cash used by investing activities                                   (967)        (1,168)
                                                                         --------       --------
Cash flows from financing activities:
     Dividends paid                                                        (2,000)        (2,000)
                                                                         --------       --------
         Net cash used in financing activities                             (2,000)        (2,000)
                                                                         --------       --------

Net decrease in cash and cash equivalents                                    (883)        (1,378)
Cash and cash equivalents, beginning of period                                883          1,560
                                                                         --------       --------
Cash and cash equivalents, end of period                                 $      0       $    182
                                                                         ========       ========
Cash paid during the period for:
Interest                                                                 $  3,920       $  3,911
Income taxes                                                                  472            459
</TABLE>



                  See notes to condensed financial statements.



                                       3
<PAGE>   6

                               CENTRAL RENTS, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS

  A.   Basis of Presentation

      The accompanying condensed financial statements of Central Rents, Inc.
  (the "Company") have been prepared in accordance with generally accepted
  accounting principles for interim financial information and with the
  instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include
  all of the information and footnotes required by generally accepted accounting
  principles for complete financial statements. In the opinion of management,
  all adjustments (consisting of only normal recurring adjustments) considered
  necessary for a fair presentation of the Company's financial condition and
  operating results for the interim periods presented have been included.
  Operating results for the quarter are not necessarily indicative of the
  results that may be expected for the year. These interim financial statements
  should be read in conjunction with the Form 10-K for the year ended December
  31, 1996, including the financial statements and notes contained therein,
  filed with the Securities and Exchange Commission.

      On March 17, 1994, the Company was incorporated in Delaware. The Company
  is a wholly owned subsidiary of Central Rents Holding, Inc. which is a wholly
  owned subsidiary of Banner Holdings, Inc. ("Banner"). On June 3, 1994, the
  Company acquired all of the outstanding stock of RTO Enterprises, Inc.,
  ("RTO") and WBC Holdings, Inc. ("WBC") for a purchase price of approximately
  $60,000,000 in cash (the "Acquisition"), in a transaction accounted for as a
  purchase. On April 28, 1995, RTO and WBC were merged into the Company pursuant
  to a statutory merger effected in accordance with the provisions of the
  Delaware General Corporation Laws.

      Certain reclassifications have been made to previously reported amounts to
  conform with the current quarter financial presentation.

  B.   Earnings Per Common Share

      Earnings per common share have been computed on the basis of the weighted
  average number of common shares outstanding. There were no common stock
  equivalents for the periods presented.

      The Financial Accounting Standards Board issued Statement of Financial
  Accounting Standards No. 128, "Earnings Per Share" (SFAS 128) and Statement of
  Financial Accounting Standards No. 129, "Disclosure of Information About
  Capital Structure" (SFAS 129) in fiscal year 1997. The Company does not expect
  that the adoption of SFAS 128 and SFAS 129 will have a material effect on its
  financial position or its results of operations for the year ended December
  31, 1997.

  C.   Amortization of Intangibles

      In connection with the Acquisition, one of the sellers entered into a
  non-compete agreement with the Company. The non-compete agreement was
  amortized over a period of 3 years. Amortization of the non-compete agreement
  was 50% in year one, 35% in year two and 15% in year three. At June 30, 1997
  the agreement was fully amortized.

      The excess of cost over net assets acquired, which relates primarily to
  the Acquisition of RTO and WBC and other stores in 1995, is currently being
  amortized on a straight-line basis over a period of 30 years. The purchase
  allocation may change upon the resolution of certain issues with the seller.
  The Company periodically reviews the excess of cost over net assets acquired
  to assess recoverability. Impairment would be recognized in operating results
  if a permanent diminution in value were to occur, pursuant to Financial
  Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
  Assets and for Long-Lived Assets to be Disposed of."

  D.   Long-term Notes and Revolving Line of Credit

      The Company funded the purchase price for the Acquisition from the
  proceeds of an offering of units (the "Offering"), consisting of $60,000,000
  principal of 12 7/8% Senior Notes due 2003 (the "Notes") and Warrants (the





                                       4
<PAGE>   7

  "Warrants") to purchase 60,000 shares of common stock of the Company, at an
  exercise price of $0.01 per share. The Offering was made in reliance upon
  exemptions from the registration requirements of the Securities Act of 1933,
  as amended and applicable state securities laws. Additional Warrants to
  purchase 6,000 shares of common stock of the Company, at an exercise price of
  $0.01 per share, were issued to Jefferies & Company, Inc., the initial
  purchaser of the Notes. Of the total proceeds, $57,389,000 was allocated to
  Notes and $2,200,000 was allocated to the issuance of Warrants. On or before
  February 28, 1997, all Warrant holders exercised their option to convert the
  Warrants into the Company's common stock.

      The Notes bear interest at the rate of 12 7/8% per annum payable
  semi-annually on June 15 and December 15. On or after June 15, 1999, the Notes
  will be redeemable at the option of the Company, in whole or in part, at the
  redemption prices as defined plus accrued and unpaid interest to the date of
  redemption.

      On May 10, 1997, the Company canceled a $25,000,000 revolving line of
  credit agreement with Wells Fargo Bank (the "Line of Credit") which was
  entered into on May 10, 1995. In November 1996, the Company and Wells Fargo
  amended the Line of Credit in order to reduce the available borrowings under
  the Line of Credit to $12,500,000. The Line of Credit was subject to an annual
  commitment fee payable to the bank on a quarterly basis of 0.5% of the unused
  borrowings. The Line of Credit was collateralized by substantially all of the
  rental merchandise of the Company and bore interest at prime plus 1%. The Line
  of Credit included various financial and other covenants which, among other
  things, provided that borrowings could not exceed an amount equal to 50% of 
  the aggregate book value of the Company's rental merchandise.

  E.   Related Party Transactions

      The Company has entered into an Administrative Services Agreement (the
  "Administrative Services Agreement") with Banner pursuant to which Banner or
  one of the other Banner subsidiaries, other than the Company, provides
  purchasing, advertising, accounting, insurance, health and other benefits,
  real estate, management information systems, and other services to the
  Company. The Company is required to reimburse Banner for its allocable share
  of direct and overhead costs determined on the basis of the Company's
  percentage utilization of the applicable services contemplated by the
  Administrative Services Agreement. The Administrative Services Agreement can
  be automatically extended for successive one-year terms through June 3, 2004
  unless the Company gives at least 30 days prior notice at the end of the then
  current term that the Administrative Services Agreement will terminate. As
  long as Banner or any other Banner subsidiary beneficially owns more than 50%
  of the voting stock of the Company, the Administrative Services Agreement
  shall not be terminable by Banner or any other Banner subsidiary as a result
  of any breach of the Administrative Services Agreement by the Company. During
  the six months ended June 30, 1997, the Company purchased $385,700 worth of
  merchandise from Banner in connection with the Administrative Services
  Agreement. The Company has not incurred any material common costs during the
  six months ended June 30, 1997 or 1996 in connection wit the Administrative
  Services Agreement.

      The Company and G.M. Cypres & Co., a related party of the Company through
  common ownership, entered into an agreement (the "Consulting Agreement")
  pursuant to which G.M. Cypres & Co. or its designee provides consulting,
  investment banking or similar services to the Company in consideration for the
  payment of certain fees and expenses, including an annual management fee (the
  "Management Fee"). Under the terms of the indenture entered into by the
  Company in connection with the issuance of the Notes, the fees and expenses
  payable under the Consulting Agreement must be reasonable and customary, and
  the Management Fee shall not exceed $375,000 per year. Management Fees under
  the terms of the Consulting Agreement totaled $187,500 for the six months
  ended June 30, 1997 and 1996.

      Effective January 1, 1995, the Company entered into a triple net lease
  agreement with BCE Properties II, Inc., a related party of the Company through
  common ownership, for office space at the Company's corporate headquarters.
  The lease provides, among other things, for monthly rent of $10,000 through
  December 31, 2005. Rent expense for the six months ended June 30, 1997 and
  1996 totaled $60,000.

  F.   Dividends

      On January 7, 1997 the Company declared a cash dividend of $3.24 per share
  on its common stock which was paid on March 5, 1997.



                                       5
<PAGE>   8



  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
           RESULTS OF OPERATIONS

  RESULTS OF OPERATIONS

      This discussion and analysis highlights the results of operations of the
  Company during the three and six months ended June 30, 1997 and 1996.

      The revenue, store operating profit, field and corporate general and
  administrative expenses, income before interest taxes and amortization of
  intangibles, net loss and number of stores of the Company were as follows for
  the three and six months ended June 30, 1997 and 1996 ($ in millions):

<TABLE>
<CAPTION>
                                                 Three Months Ended                      Six Months Ended
                                                       June 30,                               June 30,
                                             1997                1996               1997                    1996
                                     ------------------   ------------------   ------------------    -----------------
<S>                                  <C>           <C>    <C>           <C>    <C>           <C>      <C>         <C> 
Revenues ........................    $  26.4       100%   $  27.8       100%   $  53.1       100%     $  56.2     100%

Store operating profit ..........        4.4      16.7        5.7      20.5        8.9      16.8         11.3    20.1

Field and corporate general and
  administrative expenses .......        2.4       9.1        2.8      10.1        5.0       9.4          5.5     9.8

Income before interest, taxes and
  amortization of intangibles ...        2.0       7.6        2.9      10.4        3.9       7.3          5.8    10.3

Net loss ........................       (0.4)     (1.5)      (0.4)     (1.4)      (0.9)     (1.7)        (1.0)   (1.8)

  Number of stores (at end of period)         167                  167                  167                  167
</TABLE>

  THREE MONTHS ENDED JUNE 30, 1997 COMPARED WITH THE RESULTS OF OPERATIONS FOR
  THE THREE MONTHS ENDED JUNE 30, 1996.

      Revenues. Total revenues decreased $1.4 million or 5.0% to $26.4 million
  for the three months ended June 30, 1997 from $27.8 million for the three
  months in 1996. The decrease in revenues is primarily the result of a decrease
  in units on rent. The impact of the decrease in units on rent is partially
  offset by an increase in the average revenue per unit resulting from a move
  toward higher end products and improved collections. Management believes the
  decline in the portfolio of units on rent is a result of the continued
  weakness in the consumer electronics and appliances marketplace coupled with
  increased competition, primarily in its operations in the eastern and central
  states. In addition, consolidation within the rental-purchase industry over
  the last several years, especially in the eastern and central states, has
  significantly increased the competitive climate in those states and
  contributed to the general deterioration in the number of units on rent and
  resultant revenue declines.

      Store Operating Profit. Store operating profit decreased $1.3 million or
  22.8% to $4.4 million for the three months ended June 30, 1997 from $5.7
  million for the three months in 1996. The decrease in store operating profit
  was primarily the result of a decrease in gross profit of approximately $1.2
  million as a result of lower revenues in the three months ended June 30, 1997
  as compared to 1996. Total store operating expenses as a percentage of revenue
  increased to 52.5% of revenues in the three months ended June 30, 1997 from
  49.9% for the three months in 1996. Store operating expenses increased
  slightly in 1997 as compared to 1996 primarily due to increased advertising
  costs offset by decreased customer related costs and lower depreciation
  expense. Store operating profit as a percentage of revenue decreased to 16.7%
  of revenues for the three months ended June 30, 1997 from 20.5% for the same
  period in 1996. Management has taken steps to reduce labor and other operating
  costs in the stores as a result of the decline in the portfolio of units on
  rent. However, due to the relatively small physical size of the Company's
  operating units and relatively small number of personnel in each location,
  significant reductions in labor and other operating costs have been difficult
  to achieve.

      Comparable Stores. Comparable store revenues decreased $1.0 million or
  3.7%, to $25.9 million for the three months ended June 30, 1997 from $27.4
  million for the three months in 1996. The decrease in comparable store
  revenues was 


                                       6
<PAGE>   9

  primarily the result of a decrease in units on rent for the three months ended
  June 30, 1997 as compared to the same period in 1996. Comparable store
  operating profit decreased $0.9 million or 16.1%, to $4.7 million for the
  three months ended June 30, 1997 from $5.7 million for the same period in
  1996. The decrease in comparable store operating profit was primarily the
  result of a decrease in same store gross profit as a result of fewer units on
  rent in 1997.

      Field and Corporate General and Administrative Expenses. Field and
  corporate general and administrative expenses decreased by $0.4 million or
  14.3%, to $2.4 million for the three months ended June 30, 1997 from $2.8
  million for the three months in 1996. Field and corporate general and
  administrative expenses for the three months ended June 30, 1997 as a
  percentage of revenue decreased to 9.1% from 10.1% for the same period in
  1996. The decrease in expenses is primarily due to lower payroll, benefits and
  travel costs.

      Income Before Interest, Taxes and Amortization of Intangibles. Income
  before interest, taxes and amortization of intangibles decreased $0.9 million
  or 31.0%, to $2.0 million for the three months ended June 30, 1997 from $2.9
  million for the three months in 1996. The decrease in income before interest,
  taxes and amortization of intangibles is primarily the result of the decrease
  in store operating profit for the three months ended June 30, 1997 as compared
  to the same period in 1996. Income before interest, taxes and amortization of
  intangibles as a percentage of revenue decreased to 7.6% for the three months
  ended June 30, 1997 from 10.4% for the same period in 1996.

      Net loss. There was no dollar or percentage change in net loss for the
  three months ended June 30, 1997 compared to the same period in 1996. Net loss
  as a percentage of revenue decreased to 1.5% for the three months ended June
  30, 1997 from 1.4% for the three months in 1996. This decrease was primarily
  due to a reduction in the amortization expense of customer rental agreements
  and the non-compete agreement offset by a decrease in store operating profit.

  SIX MONTHS ENDED JUNE 30, 1997 COMPARED WITH THE RESULTS OF OPERATIONS FOR THE
  SIX MONTHS ENDED JUNE 30, 1996.

      Revenues. Total revenues decreased $3.1 million or 5.5%, to $53.1 million
  for the six months ended June 30, 1997 from $56.2 million for the six months
  in 1996. The decrease in revenues is primarily the result of a decrease in
  units on rent. The impact of the decrease in units on rent is partially offset
  by an increase in the average revenue per unit resulting from a move toward
  higher end products and improved collections. Management believes the decline
  in the portfolio of units on rent is a result of the continued weakness in the
  consumer electronics and appliances marketplace coupled with increased
  competition, primarily in its operations in the eastern and central states. In
  addition, consolidation within the rental-purchase industry over the last
  several years, especially in the eastern and central states, has significantly
  increased the competitive climate in those states and contributed to the
  general deterioration in the number of units on rent and resultant revenue
  declines.

      Store Operating Profit. Store operating profit decreased $2.4 million or
  21.2%, to $8.9 million for the six months ended June 30, 1997 from $11.3
  million for the six months in 1996. The decrease in store operating profit was
  primarily the result of a decrease in gross profit of approximately $2.1
  million as a result of lower revenues in the six months ended June 30, 1997 as
  compared to 1996 with an increase of $0.3 million in store operating expenses.
  Total store operating expenses as a percentage of revenue increased to 52.3% 
  of revenues in the six months ended June 30, 1997 from 49.0% for the six 
  months in 1996. The increase in store operating expenses was largely due to an
  increase in advertising and occupancy costs. Store operating profit as a
  percentage of revenue decreased to 16.8% of revenues for the six months ended
  June 30, 1997 from 20.1% for the same period in 1996. Management has taken
  steps to reduce labor and other operating costs in the stores as a result of
  the decline in the portfolio of units on rent. However, due to the relatively
  small physical size of the Company's operating units and relatively small
  number of personnel in each location, significant reductions in labor and
  other operating costs have been difficult to achieve.

      Comparable Stores. Comparable store revenues decreased $2.5 million or
  4.6%, to $52.0 million for the six months ended June 30, 1997 from $54.7
  million for the six months in 1996. The decrease in comparable store revenues
  was primarily the result of a decrease in units on rent for the six months
  ended June 30, 1997 as compared to the same period in 1996. Comparable store
  operating profit decreased $2.0 million or 17.9%, to $9.2 million for the six
  months ended June 30, 1997 from $11.2 million for the same period in 1996. The
  decrease in comparable store operating profit was primarily the result of a
  decrease in same store gross profit as a result of fewer units on rent in 1997
  with an increase in store operating expenses as previously discussed.



                                       7
<PAGE>   10

      Field and Corporate General and Administrative Expenses. Field and
  corporate general and administrative expenses decreased by $0.5 million or
  9.1%, to $5.0 million for the six months ended June 30, 1997 from $5.5 million
  for the six months in 1996. Field and corporate general and administrative
  expenses for the six months ended June 30, 1997 as a percentage of revenue
  decreased 9.4% from 9.8% for the same period in 1996. The decrease is
  primarily due to reduced compensation and benefit costs.

      Income Before Interest, Taxes and Amortization of Intangibles. Income
  before interest, taxes and amortization of intangibles decreased $1.9 million
  or 32.8%, to $3.9 million for the six months ended June 30, 1997 from $5.8
  million for the six months in 1996. The decrease in income before interest,
  taxes and amortization of intangibles is primarily the result of the decrease
  in store operating profit for the six months ended June 30, 1997 as compared
  to the same period in 1996. Income before interest, taxes and amortization of
  intangibles as a percentage of revenue decreased to 7.3% for the six months
  ended June 30, 1997 from 10.3% for the same period in 1996.

      Net loss. Net loss decreased $0.1 million or 10% to $0.9 million for the
  six months ended June 30, 1997 from $1.0 million for the three months in 1996.
  Net loss as a percentage of revenue decreased from 1.8% to 1.7%.

  LIQUIDITY AND CAPITAL RESOURCES

      The Company's primary capital expenditures are purchases of rental
  merchandise throughout the year to replace rental merchandise which has been
  sold or charged-off. Total purchases of rental merchandise were $17.1 million
  during the six months ended June 30, 1997. The Company's other capital
  expenditures consist of purchases of property, fixtures and office equipment,
  including store improvements. Total combined capital expenditures on these
  items for the six months June 30, 1997 totaled $1.8 million primarily due to
  new stores, emphasis on remodeling existing stores and computer upgrades.

      The Company's long-term notes (the "Notes") of $60,000,000 were issued in
  connection with the acquisition of RTO and WBC in June 1995 and bear interest
  at the rate of 12 7/8% per annum payable semi-annually on June 15 and December
  15. On or after June 15, 1999 the Notes will be redeemable at the option of
  the Company, in whole or in part, at the redemption prices as defined, plus
  accrued and unpaid interest to the date of redemption.

      On May 10, 1997 the Company canceled a $25,000,000 revolving line of
  credit with Wells Fargo Bank (the "Line of Credit") entered into May 11, 1995.
  In November 1996, the Company and Wells Fargo amended the Line of Credit to
  reduce the available borrowings under the Line of Credit to $12,500,000. The
  Line of Credit was subject to an annual commitment fee payable to the bank on
  a quarterly basis of 0.5% of the unused borrowings. The Line of Credit was
  collateralized by substantially all of the rental merchandise of the Company
  and bore interest at prime plus 1%. The Line of Credit included various
  financial and other covenants which, among other things, provided that
  borrowings by the Company could not exceed an amount equal to 50% of the
  aggregate book value of the Company's rental merchandise.

      On January 7, 1997 the Company declared a cash dividend on its common
  stock to be paid to the holders of record of the Company's common stock as of
  February 28, 1997 payable on March 5, 1997. On or before February 28, 1997,
  all Warrant holders exercised their option to convert the Warrants into the
  Company's common stock.

      On March 5, 1997, the Company paid a total cash dividend of $2.0 million
  to the holders of its common stock.

      The Internal Revenue Service (the "IRS") published a revenue ruling in
  July 1995 providing that the Modified Accelerated Cost Recovery System
  ("MACRS") is the appropriate depreciation method for rental-purchase
  merchandise. The Company had been using the income forecast method of
  depreciation for tax accounting, and management believes that this method has
  been widely used throughout the rental-purchase industry prior to the
  publication of this revenue ruling. The Company received permission from the
  IRS and converted to the MACRS method of depreciation for tax accounting
  purposes only, effective January 1, 1996. Management believes that the
  Company's conversion to MACRS will not significantly impact the Company's
  financial condition or results of operations.

      The Company's primary sources of liquidity are expected to be its cash
  flow from operations and short-term investments currently available.
  Management intends to expand its operations through acquisitions and new store




                                       8
<PAGE>   11

  openings. The Company has continued to consolidate stores that operated in
  overlapping geographic markets and sold certain other stores that were not
  located within the Company's targeted geographic markets. The Company has
  opened four new stores in the three months ended June 30, 1997. Additional
  expansion is planned for the remainder of 1997 in several strategic geographic
  regions to strengthen the Company's market position. The Company does not have
  any mandatory debt amortization requirements until the year 2003.



                                       9
<PAGE>   12

  PART II.   OTHER INFORMATION

  ITEM 5. OTHER INFORMATION

     None.

  ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)     Exhibits

     3.1      Amended and Restated Certificate of Incorporation of 
              Central Rents, Inc.*

     4.1      Purchase Agreement dated June 3, 1994*

     4.2      Registration Rights Agreement dated June 3, 1994*

     4.3      Indenture dated June 3, 1994*

     4.4      Form of Series A Note (Included in Exhibit 4.3)*

     4.5      Form of Series B Note (Included in Exhibit 4.3)*

     4.6      Warrant Agreement dated June 3, 1994*

    10.1      Tax Sharing Agreement*

    10.2      Administrative Services Agreement*

    10.3      Consulting Agreement*

    10.4      Central Rents, Inc. Vehicle Lease Agreement**

    10.5      Central Rents, Inc. 1994 Stock Option Plan**

    10.6      Credit Agreement by and between Central Rents, Inc. as Borrower
              and Wells Fargo Bank National Association, as Bank, dated May 11,
              1995***

    10.7      First Amendment to Credit Agreement by and between Central Rents,
              Inc. as borrower and Wells Fargo Bank National Association as
              Bank, dated November 4, 1996****

    27        Financial Data Schedule

     (b)      Reports

              No reports on Form 8-K were required to be filed by the Company
              during the three months ended June 30, 1997.


------------ 
*     Incorporated by reference from the Company's Registration Statement on
      Form S-1 (No. 33-81370)

**    Incorporated by reference from the Company's Form 10-K for the fiscal year
      ended December 31, 1994

***   Incorporated by reference from the Company's Form 10-Q for the quarterly
      period ended March 31, 1995

****  Incorporated by reference from the Company's From 10-Q for the quarterly
      period ended September 30, 1996




                                       10
<PAGE>   13


                                   SIGNATURES

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

                                             CENTRAL RENTS, INC.


   August 14, 1997                           /s/ GARY M. CYPRES
                                             -----------------------
                                             Gary M. Cypres
                                             Chairman


   August 14, 1997                           /s/ DEREK S. STAMPER
                                             -----------------------
                                             Derek S. Stamper
                                             President


   August 14, 1997                           /s/ A. KEITH WALL
                                             -----------------------
                                             A. Keith Wall
                                             Vice President
                                             Chief Financial Officer



                                       11
<PAGE>   14


   INDEX TO EXHIBITS


<TABLE>
<CAPTION>
     Exhibit
     Number                       Description
     ------                       -----------
      <S>      <C>
      3.1      Amended and Restated Certificate of Incorporation of Central 
               Rents, Inc.*

      4.1      Purchase Agreement dated June 3, 1994*

      4.2      Registration Rights Agreement dated June 3, 1994*

      4.3      Indenture dated June 3, 1994*

      4.4      Form of Series A Note (Included in Exhibit 4.3)*

      4.5      Form of Series B Note (Included in Exhibit 4.3)*

      4.6      Warrant Agreement dated June 3, 1994*

     10.1      Tax Sharing Agreement*

     10.2      Administrative Services Agreement*

     10.3      Consulting Agreement*

     10.4      Central Rents, Inc. Vehicle Lease Agreement**

     10.5      Central Rents, Inc. 1994 Stock Option Plan**

     10.6      Credit Agreement by and between Central Rents, Inc. as Borrower
               and Wells Fargo Bank National Association, as Bank, dated May 11,
               1995***

     10.7      First Amendment to Credit Agreement by and between Central Rents,
               Inc. as Borrower and Wells Fargo Bank National Association as
               Bank, dated November 4, 1996****

     27        Financial Data Schedule
</TABLE>

------------
*     Incorporated by reference from the Company's Registration Statement on
      Form S-1 (No. 33-81370)

**    Incorporated by reference from the Company's Form 10-K for the fiscal year
      ended December 31, 1994

***   Incorporated by reference from the Company's Form 10-Q for the quarterly
      period ended March 31, 1995.

****  Incorporated by reference from the Company's Form 10-Q for the quarterly
      period ended September 30, 1996.