<PAGE>   1

================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                  ------------


                                    FORM 10-Q


                                  ------------


(Mark One)

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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001

                                       OR

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


                                  ------------


                         Commission File Number 0-22026

                                 RENT-WAY, INC.
             (Exact name of registrant as specified in its charter)


                                  ------------
<TABLE>
<S>                                                 <C>

                    PENNSYLVANIA                                   25-1407782
                    ------------                                   ----------
(State or other jurisdiction of incorporation)      (I.R.S. Employer Identification No.)
</TABLE>

                   ONE RENTWAY PLACE, ERIE, PENNSYLVANIA 16505
                  --------------------------------------------
                    (Address of principal executive offices)

                                 (814) 455-5378
                         (Registrant's telephone number)


         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                         No      X
    -------------              ------------


        Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
       <S>                             <C>

            Class                      Outstanding as of August 20, 2001
       ----------------                ---------------------------------
         Common Stock                               24,509,979
</TABLE>



================================================================================
<PAGE>   2


                                 RENT-WAY, INC.
<TABLE>
<CAPTION>
                                                                                                                  PAGE
                                                                                                                  ----
<S>     <C>                                                                                                       <C>
PART I   FINANCIAL INFORMATION

         Item 1.  Financial Statements:

                  Condensed Consolidated Balance Sheets as of June 30, 2001 (unaudited)
                  and September 30, 2000.......................................................................... 3

                  Condensed Consolidated Statements of Operations, three and nine months
                  ended June 30, 2001 and 2000 (unaudited)........................................................ 4

                  Condensed Consolidated Statements of Cash Flows, nine months ended
                  June 30, 2001 and 2000 (unaudited).............................................................. 5

                  Notes to Condensed Consolidated Financial Statements (unaudited)...............................  6

         Item 2.  Management's Discussion and Analysis
                  of Financial Condition and Results of Operations............................................... 12

         Item 3.  Quantitative and Qualitative Disclosures About Market Risk..................................... 16

PART II  OTHER INFORMATION

         Item 1.  Legal Proceedings...............................................................................18

         Item 5.  Defaults on Senior Securities...................................................................19

         Item 6.  Exhibits and Reports on Form 8-K................................................................19

         Signatures...............................................................................................20
</TABLE>




                                       2
<PAGE>   3

                                 RENT-WAY, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                           (all dollars in thousands)

<TABLE>
<CAPTION>
                                                                              JUNE 30,           SEPTEMBER 30,
                                                                                2001                  2000
                                                                             ---------           -------------
                                                                            (unaudited)
<S>                                                                          <C>                   <C>
ASSETS

Cash and cash equivalents                                                    $ 13,691              $ 10,654
Prepaid expenses                                                               10,093                13,997
Income tax receivable                                                           8,623                20,607
Rental merchandise, net                                                       258,610               282,052
Rental merchandise deposit                                                      2,672                33,289
Deferred tax asset, net                                                            --                    --
Property and equipment, net                                                    78,007                78,408
Goodwill, net                                                                 296,833               307,690
Deferred financing costs, net                                                   4,577                 5,068
Non-compete and prepaid consulting fees, net                                    1,984                 3,236
Other assets                                                                    6,522                11,310
                                                                             --------              --------
        Total assets                                                         $681,612              $766,311
                                                                             ========              ========

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
Accounts payable                                                             $ 16,643              $ 42,750
Other liabilities                                                              89,610                67,887
Debt                                                                          343,937               387,852
                                                                             --------              --------
        Total liabilities                                                     450,190               498,489

Contingencies (See Note 7)                                                         --                    --

SHAREHOLDERS' EQUITY:

Preferred stock, without par value; 1,000,000 shares authorized;
     no shares issued and outstanding                                              --                    --
Common stock, without par value; 50,000,000 shares
     Authorized 24,509,979 and 24,331,000 shares issued and
     outstanding for 2001 and 2000, respectively                              295,610               295,185
Loans to shareholders                                                            (904)                 (690)
Accumulated other comprehensive income                                          1,862                    --
Retained earnings                                                             (65,146)              (26,673)
                                                                             --------              --------
        Total shareholders' equity                                            231,422               267,822
                                                                             --------              --------
        Total liabilities and shareholders' equity                           $681,612              $766,311
                                                                             ========              ========
</TABLE>



   The accompanying notes are an integral part of these financial statements.



                                       3
<PAGE>   4

                                 RENT-WAY, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (all dollars in thousands, except per share data)
<TABLE>
<CAPTION>

                                                             FOR THE THREE MONTHS ENDED                FOR THE NINE MONTHS ENDED
                                                                      JUNE 30,                                 JUNE 30,
                                                             2001                2000                2001               2000
                                                             ----                ----                ----               ----
                                                          (unaudited)         (unaudited)         (unaudited)         (unaudited)
                                                                             (As Restated)                           (As Restated)
                                                                                                                      (See Note 9)
<S>                                                         <C>                 <C>                 <C>                 <C>
REVENUES:
Rental revenue                                              $133,583            $126,671            $402,920            $373,676
Phone service revenue                                          8,942               3,081              26,316               3,081
Other revenue                                                 22,454              21,160              69,448              63,955
                                                            --------            --------            --------            --------
       Total revenues                                        164,979             150,912             498,684             440,712

COSTS AND OPERATING EXPENSES:
Depreciation and amortization:
    Rental merchandise                                        52,437              39,428             151,228             112,828
    Property and equipment                                     7,829               6,988              23,477              18,634
    Amortization of goodwill and other intangibles             3,667               3,564              11,002              10,200
Cost of prepaid phone service                                  4,609               2,415              14,660               2,415
Salaries and wages                                            39,005              38,012             119,977             109,997
Advertising                                                    3,855               2,517              17,036              10,815
Occupancy                                                     11,462              11,331              36,195              34,665
Other operating expenses                                      39,734              39,791             121,772             113,236
                                                            --------            --------            --------            --------
        Total costs and operating expenses                   162,598             144,046             495,347             412,790
                                                            --------            --------            --------            --------
        Operating income                                       2,381               6,866               3,337              27,922

OTHER INCOME (EXPENSE):
Interest expense                                             (10,909)             (7,406)            (32,900)            (21,185)
Equity in loss of subsidiary                                      --                  --                  --                (573)
Interest income                                                   58                  37                 180                 115
Other income (expense), net                                     (227)                 30              (9,090)               (151)
                                                            --------            --------            --------            --------
       Income before income taxes                             (8,697)               (473)            (38,473)              6,128
Income tax expense                                                --                (162)                 --               2,442
                                                            --------            --------            --------            --------
Net income                                                  $ (8,697)           $   (311)           $(38,473)           $  3,686
                                                            =========           ========            ========            ========

EARNINGS PER COMMON SHARE (NOTE 3):
Basic earnings per common share:
     Net income                                             $  (0.35)          $   (0.01)          $   (1.57)           $   0.16
                                                            ========           =========           =========            ========

Diluted earnings per common share:
     Net income                                             $  (0.35)          $   (0.01)          $   (1.57)           $   0.16
                                                            ========           =========           =========            ========

Weighted average common shares outstanding:
     Basic                                                    24,510              23,984              24,498              22,932
                                                            ========           =========           =========            ========
     Diluted                                                  24,510              23,984              24,498              22,932
                                                            ========           =========           =========            ========
</TABLE>

    The accompanying notes are an integral part of these financial statements



                                       4
<PAGE>   5

                                 RENT-WAY, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (all dollars in thousands)
<TABLE>
<CAPTION>
                                                                                       FOR THE NINE MONTHS ENDED
                                                                                               JUNE 30,
                                                                                      2001                    2000
                                                                                    ----------            -----------
                                                                                   (unaudited)            (unaudited)
                                                                                                         (As Restated)
                                                                                                          (See Note 9)
<S>                                                                                 <C>                   <C>
OPERATING ACTIVITIES:
Net income (loss)                                                                   $ (38,473)            $   3,686
Adjustments to reconcile net income to net cash
   provided by operating activities:
    Depreciation and amortization                                                     185,803               142,145
    Deferred income taxes                                                                  --                 2,405
    Write-off of property and equipment                                                 1,186                 3,174
    Gain or loss on sale of assets                                                       (316)                   --
Changes in assets and liabilities:
    Prepaid expenses                                                                    3,904                (3,624)
    Rental merchandise                                                               (128,534)             (174,289)
    Rental merchandise deposits and credits due from vendors                           30,617                    --
    Income tax receivable                                                              11,984                (5,018)
    Other assets                                                                        6,258                  (335)
    Accounts payable                                                                  (29,735)               (4,190)
    Income taxes payable                                                                   --                    --
    Other liabilities                                                                  17,641                10,786
                                                                                    ---------             ---------
                     Net cash provided by (used in) operating activities               60,335               (25,260)

INVESTING ACTIVITIES:
    Purchase of businesses, net of cash acquired                                         (658)              (11,153)
    Purchases of property and equipment                                                (8,479)              (25,546)
    Proceeds from sale of assets                                                        3,779                    --
                                                                                    ---------             ---------
                  Net cash used in investing activities                                (5,358)              (36,699)

FINANCING ACTIVITIES:
    Proceeds from borrowings                                                          369,720               313,172
    Payments on borrowings including early extinguishment                            (425,247)             (271,951)
    Book overdraft                                                                      3,628                13,256
    Deferred finance costs                                                               (252)               (2,749)
    Proceeds from common stock issuance                                                   425                 6,031
    Interest on loans to directors                                                        (55)                   --
    Loan to director                                                                     (159)                   --
    Issuance of common stock to Gateway                                                    --                 7,000
    Purchase of common stock                                                               --                   (94)
    Payment of loans by directors                                                          --                   140
                                                                                    ---------             ---------
                  Net cash provided by (used in) financing activities                 (51,940)               64,805
                                                                                    ---------             ---------
                  Increase (decrease) in cash                                           3,037                 2,846

Cash at beginning of period                                                            10,654                 8,646
                                                                                    ---------             ---------

Cash at end of period                                                               $  13,691             $  11,492
                                                                                    =========             =========

Supplemental disclosure of noncash financing activity:
    Common stock issued to extinguish debt                                          $      --             $  20,000
                                                                                    =========             =========
    Purchase of Gateway exclusivity agreement                                       $      --             $   2,038
                                                                                    =========             =========
</TABLE>

   The accompanying notes are an integral part of these financial statements.



                                       5
<PAGE>   6

                                 RENT-WAY, INC.

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                (all dollars in thousands, except per share data)

1.   BASIS OF PRESENTATION:

     Rent-Way, Inc., (the "Company" or "Rent-Way") is a corporation organized
under the laws of the Commonwealth of Pennsylvania. The Company operates a chain
of rental-purchase stores that rent durable household products such as home
entertainment equipment, furniture, computers, major appliances and jewelry to
consumers on a weekly or monthly basis. The stores are primarily located in the
Midwestern, Eastern and southern regions of the United States. Commencing
January 1, 2000, the Company also provides prepaid local phone service to
consumers on a monthly basis through its majority-owned subsidiary, dPi
Teleconnect, LLC ("DPI"). On January 1, 1999, the Company formed four
wholly-owned subsidiaries: Rent-Way TTIG, L.P., an Indiana limited partnership,
Rent-Way of Tomorrow, Inc., Rent-Way of Michigan, Inc. and Rent-Way
Developments, Inc., all Delaware Corporations. The accompanying unaudited
condensed consolidated financial statements have been prepared in accordance
with the instructions to Form 10-Q, and therefore, do not include all
information and notes necessary for a fair presentation of financial position,
results of operations and cash flows in conformity with generally accepted
accounting principles. In the opinion of management, all adjustments (which,
except as discussed herein consist of normal recurring adjustments), which are
necessary for a fair statement of the financial position, results of operations
and cash flows of the Company have been made. The results of operations for the
interim periods are not necessarily indicative of the results for the full year.

     The condensed consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All significant intercompany
transactions and balances have been eliminated.

     These financial statements and the notes thereto should be read in
conjunction with the Company's audited financial statements included in its
Annual Report on Form 10 K/A for the fiscal year ended September 30, 2000.

2.   RESTATEMENTS:

     Prior to the issuance of Rent-Way, Inc., and subsidiaries (the "Company" or
"Rent-Way") consolidated financial statements as of and for the year ended
September 30, 2000, it was determined that the results reported in the Company's
unaudited interim financial statements as of and for the periods ended December
31, 1999; March 31, 2000; and June 30, 2000, were misstated. The Audit Committee
of the Board of Directors immediately instituted an investigation with the
assistance of legal counsel and an accounting investigative team.

     After evaluating information revealed in the investigation and in
preparation of its fiscal 2000 year-end financial statements, the Company has
determined that accounting improprieties occurred in fiscal 2000, 1999 and 1998
that overstated assets and income and understated liabilities and expense. As a
result, the Company has determined to restate previously reported fiscal 1999
and 1998 financial statements. Also, the quarterly financial data for fiscal
year 1999 and for the interim periods ended December 31, 1999; March 31, 2000;
and June 30, 2000, have been restated. The restated financial statements as of
and for the three and nine months ended June 30, 2000, have been included in the
condensed consolidated financial statements included herein.

     A summary of the effects of the restatement to the Statement of Operations
for the nine month period ended June 30, 2000 is set forth in Note 9.









                                       6
<PAGE>   7

                                 RENT-WAY, INC.

   NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                (all dollars in thousands, except per share data)

3.   EARNINGS (LOSS) PER COMMON SHARE:

     Basic earnings (loss) per common share is computed using income (loss)
available to common shareholders divided by the weighted average number of
common shares outstanding. Diluted earnings (loss) per common share is computed
using income (loss) available to common shareholders adjusted for anticipated
interest savings, net of related taxes, on conversion of the Company's
convertible subordinated debentures and the weighted average number of shares
outstanding is adjusted for the potential impact of options, warrants and
convertible subordinated debentures where the effects are dilutive.

     The following table discloses the reconciliation of numerators and
denominators of the basic and diluted earnings (loss) per common share
computation:
<TABLE>
<CAPTION>
                                                                     FOR THE THREE MONTHS          FOR THE NINE MONTHS
                                                                            ENDED                         ENDED
                                                                          JUNE 30,                      JUNE 30,
                                                                         (UNAUDITED)                   (UNAUDITED)
                                                                   ------------------------       ----------------------
         COMPUTATION OF EARNINGS (LOSS) PER SHARE:                   2001            2000           2001          2000
         -----------------------------------------                 --------         -------       --------       -------
                                                                                 (As Restated)                (As Restated)
                                                                                                               (See Note 9)
         <S>                                                       <C>              <C>           <C>            <C>
         BASIC
         Earnings applicable to common shares.................     $ (8,697)        $  (311)      $(38,473)      $ 3,686
                                                                   ========         =======       ========       =======
         Weighted average number of common shares
           outstanding during the period .....................       24,510          23,984         24,498        22,932
                                                                   ========         =======       ========       =======
         Basic earnings per common share:
           Net income ........................................     $  (0.35)        $ (0.01)      $  (1.57)      $  0.16
                                                                   ========         =======       ========       =======
         DILUTED
         Earnings applicable to common shares.................     $ (8,697)        $  (311)      $(38,473)      $ 3,686
         Interest on 7% convertible debentures (net of tax)...           --              --             --            --
                                                                   --------         -------       --------       -------
         Earnings applicable for diluted earnings per share...     $ (8,697)        $  (311)      $(38,473)      $ 3,686
                                                                   ========         =======       ========       =======
         Weighted average number of common shares
           outstanding during the period used in basic
           calculation........................................       24,510          23,984         24,498        22,932
         Shares issuable upon exercise of stock options,
           warrants and escrowed shares ......................           --              --             --            --
         Shares issued on conversion of 7% convertible
           debentures ........................................           --              --             --            --
                                                                   --------         -------       --------       -------
         Weighted average number of shares used in
           calculation of diluted earnings per share..........       24,510          23,984         24,498        22,932
                                                                   ========         =======       ========       =======
         Earnings per common share:
           Net income ........................................     $  (0.35)        $ (0.01)      $  (1.57)      $  0.16
                                                                   ========         =======       ========       =======
</TABLE>

4.   DEBT:

     The Company's credit facility with a syndicate of banks was amended on June
28, 2000. The amended facility, co-led by National City Bank, acting as
administrative agent, Bank of America, N.A., acting as documentation agent, and
Bank of Montreal and Harris Trust and Savings Bank, acting as syndication
agents, provides for loans and letters of credit of up to $435,000 (revolving
notes and letters of credit $114,444, Term Loans A $143,056 and Term Loans B
$177,500). The amendment amended the Company's credit facility dated September
23, 1999, as amended November 17, 1999; December 6, 1999; and December 7, 1999.

     In November 2000 absent a waiver the Company would have failed to meet
certain covenants in its bank credit agreements including financial covenants,
monthly and quarterly financial reporting requirements and record keeping
requirements. The Company obtained a waiver of these requirements conditioned on
the non-occurrence of certain events. As a result of the Company's announcement
in December 2000 of an increase in the total adjustments resulting from the
accounting matters under investigation, the waiver expired by its terms, and the
Company and its bank lenders entered into a forbearance agreement dated December
18, 2000. The forbearance agreement limited revolving credit loans to $91,124.
The forbearance agreement was subsequently amended several times. The sixth
amendment to the forbearance agreement, which expires on October 5, 2001, limits
the maximum borrowings under the credit facility at $61,128. The Company is
negotiating with its banks to amend its credit agreement.



                                       7
<PAGE>   8

                                 RENT-WAY, INC.

   NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                (all dollars in thousands, except per share data)


4.   DEBT, CONTINUED:

     As of June 30, 2001, the Company's credit facility debt under both the
euro-rate option and base-rate option plans were as follows:
<TABLE>
<CAPTION>

                                   BORROWING OPTION PLAN                  AMOUNT         RATE
                                   ---------------------                  ------         ----
                  <S>                                                    <C>             <C>
                  Base-rate......................................        $174,620        9.75%
                  Base-rate......................................         129,560        9.00%
                  Base-rate......................................          39,620        9.00%
                                                                         --------
                                                                         $343,800
                                                                         ========
</TABLE>

5.   DERIVATIVE FINANCIAL INSTRUMENTS:

     At June 30, 2001, the Company had interest rate swaps in the notional
amount of $183,800 and a fair market value of $(6.8) million. The variable pay
interest rate ranges from 5.09% to 6.97%. The maturity dates run through August
2005.

     The Company's interest rate swaps do not meet the qualifications for hedge
accounting treatment under SFAS No. 133. the Company adopted SFAS No. 133 on
October 1, 2000. As a result, the fair value of the swaps was recorded as an
asset in the amount of $2,510 with the offset to other comprehensive income.
There was no tax impact to other comprehensive income resulting from the
adoption, due to a full net deferred tax asset valuation allowance existing at
September 30, 2000. The reduction to the deferred tax asset, net of liabilities
of $979 was offset by a reduction to the deferred tax valuation allowance of
$979 at adoption. The transition asset is being amortized into earnings over the
remaining life of the interest rate swap agreements. For the quarter ended June
30, 2001, the Company's adverse change in the fair market value of the interest
rate swap portfolio of $506 was charged to other expense in the Company's
Consolidated Statements of Operations.

6.   COMPREHENSIVE INCOME:

     Comprehensive income encompasses net income and changes in the components
of accumulated other comprehensive income not reflected in the Company's
Consolidated Statements of Operations during the periods presented. Accumulated
other comprehensive income consists of the transition asset recorded at the time
of adoption of SFAS No. 133.
<TABLE>
<CAPTION>

                                                                    Other               Accumulated Other
                                                                Comprehensive             Comprehensive
                                                                   Income                    Income
                                                                   ------                    ------
          <S>                                                   <C>                     <C>
          Net loss for the three months
               ended December 31, 2000                           $(25,751)
          SFAS 133 Transition amount                                2,510                    $2,510

          Amortization of SFAS 133
               Transition amount                                     (216)                     (216)
                                                                 --------                    ------
          Total for three months ended December 31, 2000         $(23,457)                   $2,294
                                                                 --------                    ------
          Net loss for the three months
               ended March 31, 2001                              $ (4,025)

          Amortization of SFAS 133
               Transition amount                                     (216)                   $ (216)
                                                                 --------                    ------
          Total for the six months ended March 31, 2001          $(27,698)                    2,078
                                                                 --------                    ------
          Net loss for the three months
               ended June 30, 2001                                 (8,697)

          Amortization of SFAS 133
               Transition amount                                 $   (216)                   $ (216)
                                                                 --------                    ------
          Total for the nine months ended June 30, 2001          $(36,611)                   $1,862
                                                                 ========                    ======
</TABLE>



                                       8
<PAGE>   9
                                 RENT-WAY, INC.

   NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                (all dollars in thousands, except per share data)

7.   CONTINGENCIES

     As of August 1, 2001, Rent-Way has been served with twelve complaints in
purported class action lawsuits filed in or transferred to the U.S. District
Court for the Western District of Pennsylvania. The complaints allege that,
among other things, as a result of accounting irregularities, the Company's
previously issued financial statements were materially false and misleading thus
constituting violations of federal securities laws by the company and by certain
officers. The actions allege that the defendants violated Sections 10(b) and/or
Section 20(a) of the Securities Exchange Act and Rule 10b-5 promulgated
thereunder. The actions seek damages in unspecified amounts. The actions purport
to be brought on behalf of purchasers of the Company's common stock during
various periods, all of which fall between January 18, 2000, and October 30,
2000. The District Court has ordered that the actions be consolidated. Rent-Way
is currently evaluating these claims and possible defenses thereto. Additional
purported class action lawsuits similar to those described above may be filed,
and the existing lawsuits may be amended to increase the purported class.

     Certain of Rent-Way's officers and directors and Rent-Way, as nominal
defendant, have been sued in a shareholder derivative action brought on behalf
of Rent-Way in the U.S. District Court for the Western District of Pennsylvania.
The derivative complaint purports to assert claims on behalf of Rent-Way against
the defendants for violation of duties asserted to be owed by the defendants to
Rent-Way and which relate to the events which gave rise to the purported class
actions described above. All proceedings in the derivative case have been
stayed, pending the resolution of the class actions. Rent-Way cannot predict the
outcome of the litigation.

     Pursuant to its bylaws, Rent-Way is obligated to indemnify its officers and
directors under certain circumstances against claims made in these lawsuits.
Rent-Way may also be obligated to indemnify certain of its officers and
directors for the costs they incur as a result of the lawsuits.

     While it is not feasible to predict or determine the final outcome of these
or similar proceedings, or to estimate the amounts or potential range of loss
with respect to these matters, management believes that an adverse outcome with
respect to such proceedings could have a material adverse impact on the
Company's financial position and results of operations.

     The Company is subject to legal proceedings and claims in the ordinary
course of its business that have not been finally adjudicated. Certain of these
cases have resulted in contingent liabilities ranging from $38,097 to $38,252.
The majority of such claims are, in the opinion of management, covered by
insurance policies or indemnification agreements and therefore should not have a
material effect on the Company's financial position and results of operations.
Additional claims exist of approximately $139 for which management believes it
has meritorious defenses but for which the likelihood of an unfavorable outcome
is currently not determinable. Additionally, claims exist for which management
is not able to estimate a potential loss. In management's opinion, none of these
claims will have a material adverse affect on the Company's financial position
and results of operations.

     The Company is self-insured for certain losses related to workers'
compensation, employee medical and employee dental claims, vehicle and general
liability.

     The Company has purchased stop-loss coverage in order to limit its exposure
to any significant levels of claims. Self-insurance reserves are accrued based
upon the Company's estimates of the aggregate liability for uninsured claims
incurred using certain actuarial assumptions followed in the insurance industry
and the Company's historical experience. The Company has obtained letters of
credit of $6,000 to guarantee the payment of future claims. The face value of
the letters of credit approximates their market value at June 30, 2001.

     As a result of the significant price drop in Rent-Way stock following
disclosure of the accounting irregularities (See Note 2), the Company has
committed to make additional contributions to the Rent-Way, Inc. 401(k)
Retirement Savings Plan (the "Rent-Way Plan") in the future to the extent the
Rent-Way stock price does not reach certain levels. On February 5, 2001, the
Company contributed $366 to the Rent-Way Plan.

8.   INCOME TAXES:

     The Company recorded no tax benefit on its operating losses for the quarter
ended June 31, 2001, due to the uncertainty of its realization. The deferred tax
asset, net of liabilities, increased from $10,050 at September 30, 2000, to
$22,869 at June 30, 2001 for an increase of $3,146 for the quarter ended
June 30, 2001, and $12,819 for the nine months ended June 30, 2001. A full
valuation allowance has been provided against that net deferred tax asset.


                                       9
<PAGE>   10


                                 RENT-WAY, INC.

 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                (all dollars in thousands, except per share data)

9.   RESTATEMENT:

     The summary of the significant effects of the restatement of the Condensed
Consolidated Statement of Operations reported on the Form 10-Q for the quarter
ended June 30, 2000, are as follows:

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (all dollars in thousands, except per share data)
<TABLE>
<CAPTION>
                                                                                 FOR THE NINE MONTHS ENDED
                                                                                       JUNE 30, 2000
                                                              -------------------------------------------------------------
                                                              (AS PREVIOUSLY REPORTED)                      (AS RESTATED)
                                                                      (UNAUDITED)        (ADJUSTMENTS)       (UNAUDITED)
                                                                      ----------         ------------       -------------
                <S>                                                   <C>                <C>                 <C>
                REVENUES:
                Rental revenue...................................      $373,676                 --             $373,676
                Prepaid phone service............................         4,256             (1,175)               3,081
                Other revenue....................................        63,955                 --               63,955
                                                                       --------           ---------            --------
                     Total revenues..............................       441,887             (1,175)             440,712

                COSTS AND OPERATING EXPENSES:
                Depreciation and amortization:
                  Rental merchandise.............................       103,180              9,648              112,828
                  Property and equipment.........................        11,797              6,837               18,634
                  Amortization of goodwill.......................         9,828                372               10,200
                Cost of prepaid phone service....................         2,657               (242)               2,415
                Salaries and wages...............................       108,918              1,079              109,997
                Advertising......................................        15,896             (5,081)              10,815
                Occupancy........................................        31,072              3,593               34,665
                Other operating expenses.........................        85,521             27,715              113,236
                                                                       --------           --------             --------
                     Total costs and operating expenses..........       368,869             43,921              412,790
                                                                       --------           --------             --------
                     Operating income (loss).....................        73,018            (45,096)              27,922

                OTHER INCOME (EXPENSE):
                Interest expense.................................       (19,973)            (1,212)             (21,185)
                Equity in loss of subsidiary.....................          (197)              (376)                (573)
                Interest income..................................           120                 (5)                 115
                Other income (expense), net......................          (175)                24                 (151)
                                                                       --------           --------             --------
                       Income (loss) before income taxes.........        52,793            (46,665)               6,128
                Income tax expense (benefit).....................        20,156            (17,714)               2,442
                                                                       --------           ---------            --------
                Net income (loss)................................      $ 32,637            (28,951)            $  3,686
                                                                       ========           ========             ========
                EARNINGS (LOSS) PER COMMON SHARE (SEE NOTE 2):
                   Basic earnings (loss) per common share:
                       Net income (loss).........................      $   1.42                                $   0.16
                                                                       ========                                ========
                   Diluted earnings (loss) per common share:
                       Net income (loss)........................       $   1.37                                $   0.16
                                                                       ========                                ========
                   Weighted average common shares outstanding:
                       Basic....................................         22,932                                  22,932
                                                                       ========                                ========
                       Diluted......................................     24,147                                  22,932
                                                                       ========                                ========
</TABLE>

     Additional information regarding the adjustments made in connection with
the restatement of the Company's Condensed Consolidated Statement of Operations
for the nine months ended June 30, 2000 contained in the Company's Annual Report
on Form 10 K/A for the year ended September 30, 2000.




                                       10
<PAGE>   11
                                 RENT-WAY, INC.

   NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
               (all dollars in thousands, except per share data)

10.  SEGMENT INFORMATION:

     Rent-Way is a national rental-purchase chain that provides a variety of
services to its customers including rental of household items and prepaid local
telephone service on a week-by-week or a month-by-month basis. The Company has
determined that its reportable segments are those that are based on the
Company's method of internal reporting, which disaggregates its business by
product category. The Company's reportable segments are household rentals and
prepaid telephone service. Its household rental segment rents name brand
merchandise such as furniture, appliances, electronics and computers on a
weekly, biweekly, semimonthly or bimonthly basis. Its prepaid telephone service
segment provides a local dial tone on a month-by-month basis.

     The financial results of the Company's segments follow the same accounting
policies as described in "Summary of Significant Accounting Policies" (see Note
1) The information presented below does not include the results of the prepaid
telephone service segment prior to January 4, 2000.
<TABLE>
<CAPTION>
                                                               Household
                                                                Rental        Prepaid Telephone
               For the three months ended June 30, 2001         Segment            Service            Total Segments
               ----------------------------------------         -------            -------            --------------
               <S>                                             <C>            <C>                     <C>
               Total revenue...................                 $156,037           $ 8,942               $164,979
                                                                ========           =======               ========
               Operating income (loss).........                 $  1,363           $ 1,018               $  2,381
                                                                ========           =======               ========
               Net income (loss)...............                 $ (9,587)          $   890               $ (8,697)
                                                                =========          =======               ========
</TABLE>

<TABLE>
<CAPTION>
                                                               Household
                                                                Rental        Prepaid Telephone
               For the nine months ended June 30, 2001          Segment            Service            Total Segments
               ----------------------------------------         -------            -------            --------------
               <S>                                             <C>            <C>                     <C>
               Total revenue...................                 $472,368           $26,316               $498,684
                                                                ========           =======               ========
               Operating income (loss).........                 $  1,468           $ 1,869               $  3,337
                                                                ========           =======               ========
               Net income (loss)...............                 $(40,028)          $ 1,555               $(38,473)
                                                                ========           =======               ========
               Total Assets....................                 $675,266           $ 6,346               $681,612
                                                                ========           =======               ========
</TABLE>

11.  RECENT ACCOUNTING PRONOUNCEMENTS:

     In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 142 "Goodwill and Other
Intangible Assets" ("SFAS No. 142"). SFAS No. 142 requires the cessation of
amortization of goodwill and other indefinite-lived intangibles on its balance
sheet. Goodwill on the balance sheet must then be tested for impairment at least
annually. The Company expects to early adopt SFAS 142 effective October 1, 2001,
but has not determined the impact of adopting this statement.

     In June 2001, FASB issued Statement of Financial Accounting Standard No.
143 "Accounting for Asset Retirement Obligations ("SFAS No. 143"). SFAS No. 143
addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. This statement is effective for financial statements issued for fiscal
years beginning after June 15, 2002. The Company is currently evaluating the
provisions of this statement.


12.  LIQUIDITY:

     The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. In November 2000 absent a waiver,
the Company would have failed to meet certain covenants in its bank credit
facility including financial covenants, monthly and quarterly financial
reporting requirements and record keeping requirements. The Company obtained a
waiver of these requirements conditioned on the non-occurrence of certain
events. As a result of the Company's announcement in December 2000 of an
increase in the total adjustments resulting from the accounting matters under
investigation (see Note 2), the waiver expired by its terms, and the Company and
its bank lenders entered into a forbearance agreement dated December 18, 2000.
The forbearance agreement limited revolving credit loans and letters of credit
to $91,124. The forbearance agreement was subsequently amended several times.
The fifth amendment to the forbearance agreement, which expires on October 5,
2001, limits the maximum borrowing under the Company's revolving portion of the
credit facility to $61,128.

     The Company is in negotiations with its lenders to amend its credit
facility such that it will provide the Company with sufficient borrowing
capacity and revised loan covenants. There can be no assurance that the Company
will be successful in negotiating an amended credit facility.

     The Company's ability to operate as a going concern is largely dependent on
its ability to successfully negotiate with its bank lenders an amendment to the
Company's existing credit facility.

13.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     BUSINESS AND ORGANIZATION. Rent-Way, Inc. is a corporation organized under
the laws of the Commonwealth of Pennsylvania. The Company operates a chain of
stores that rent durable household products such as home entertainment
equipment, furniture, major appliances, computers, and jewelry to consumers on a
weekly or monthly basis in forty-two states. The stores are primarily located in
the Midwestern, Eastern and Southern regions of the United States. Commencing
January 1, 2000, the Company also provides prepaid local phone service to
consumers on a monthly basis through its majority-owned subsidiary, dPi
Teleconnect, LLC ("DPI").

     On January 1, 1999, the Company formed four wholly-owned subsidiaries:
Rent-Way TTIG, L.P., an Indiana limited partnership, Rent-Way of Tomorrow, Inc.,
Rent-Way of Michigan, Inc., and Rent-Way Developments, Inc., all Delaware
corporations (collectively referred to herein as the "Company" or "Rent-Way").



                                       11
<PAGE>   12

                                 RENT-WAY, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                                  OF OPERATIONS
                           (all dollars in thousands)

     The Company has determined that its unaudited financial statements as of
and for the period ended June 30, 2000, were inaccurate and require restatement.
These inaccuracies and required restatements are discussed at Notes 2 and 9 of
the notes to the Company's unaudited financial statements included in this
report and in the Company's Annual Report on Form 10 K/A for the fiscal year
ended September 30, 2000. This Management's Discussion and Analysis of Financial
Condition and Results of Operations for the periods ended June 30, 2000, and
2001 reflects the restatement of the Company's previously reported financial
results for the period ended June 30, 2000.

OVERVIEW

     Rent-Way is the second largest operator in the rental purchase industry
with 1,130 stores located in 42 states as of August 22, 2001. The Company offers
quality brand name home entertainment equipment, computers, furniture,
appliances, and jewelry to customers under full-service rental-purchase
agreements that generally allow the customer to obtain ownership of the
merchandise at the conclusion of an agreed upon rental period. The Company also
provides prepaid local phone service to consumers on a monthly basis through its
majority-owned subsidiary, dPi Teleconnect, L.L.C.

RESULTS OF OPERATIONS

     The following table sets forth, for the periods indicated, certain items
from the Company's unaudited Condensed Consolidated Statements of Operations,
expressed as a percentage of revenues.
<TABLE>
<CAPTION>

                                                             FOR THE THREE MONTHS ENDED        FOR THE NINE MONTHS ENDED
                                                                      JUNE 30,                         JUNE 30,
                                                              2001             2000             2001             2000
                                                              ----             ----             ----             ----
                                                                           (As Restated)                     (As Restated)
                                                                                                             (See Note 9)
                                                                    (unaudited)                       (unaudited)
<S>                                                       <C>                   <C>             <C>            <C>
REVENUES:
Rental revenue                                                 81.0%            83.9%            80.8%            84.8%
Phone service revenue                                           5.4              2.2              5.3              0.7
Other revenues                                                 13.6             13.9             13.9             14.5
                                                              -----            -----            -----            -----
       Total revenues                                         100.0%           100.0%           100.0%           100.0%
COSTS AND OPERATING EXPENSES:
Depreciation and amortization:
    Rental merchandise                                         31.8%            26.1%            30.3%            25.6
    Property and equipment                                      4.7              4.6              4.7              4.2
    Amortization of goodwill and other intangibles              2.2              2.4              2.2              2.3
Cost of prepaid phone service                                   2.8              1.6              2.9              0.5
Salaries and wages                                             23.6             25.2             24.1             25.0
Advertising                                                     2.3              1.7              3.4              2.5
Occupancy                                                       6.9              7.5              7.3              7.9
Other operating expenses                                       24.1             26.4             24.5             25.7
                                                              -----            -----            -----            -----
        Total costs and operating expenses                     98.6%            95.5%            99.3%            93.7
                                                              -----            -----            -----            -----
        Operating income                                        1.4%             4.5%             0.7%             6.3%
OTHER INCOME (EXPENSE):
Interest expense                                               (6.6)            (4.9)            (6.6)            (4.8)%
Equity in loss of subsidiary                                     --               --               --             (0.1)
Interest income                                                  --               --               --               --
Other income (expense), net                                    (0.1)              --             (1.8)              --
                                                              -----            -----            -----            -----
       Income before income taxes                              (5.3)%           (0.3)            (7.7)%            1.4%
       Income tax expense                                        --             (0.1)              --              0.6
                                                              -----            -----            -----            -----

Net income                                                     (5.3)%           (0.2)%           (7.7)%            0.8%
                                                              =====            =====            =====            =====
</TABLE>

COMPARISON OF THREE MONTHS ENDED JUNE 30, 2001 AND 2000 (AS RESTATED)

     Total Revenues. Total revenues increased by $14.1 million, or 9.3%, to
$165.0 million from $150.9 million. The increase is attributable to the
inclusion of a partial year's operations for the stores acquired and opened in
fiscal 2000 and



                                       12
<PAGE>   13

2001, the addition of DPI revenue, and increased same store revenues offset by
the revenue lost from stores closed. Stores opened in fiscal 2000 and 2001
accounted for $8.7 million, or 61.7%, of the increase. DPI revenue accounted for
$5.8 million, or 41.1%, of the increase. The Company's same stores accounted for
$2.3 million, or 16.3%, of the increase. Stores acquired in fiscal 2000 and 2001
accounted for $1.4 million, or 9.9%, of the increase. These increases were
offset by a $4.1 million loss in revenue that resulted from stores closed or
merged. Same store revenues increased 1.9%. This increase in same store revenues
is due in part to Gateway computers and prepaid phone service added to the
Company's line of products and services during fiscal 2000. Management believes
opportunities exist to provide additional non-traditional merchandise and
services to its customers.

     Depreciation and Amortization. Depreciation expense related to rental
merchandise increased to 31.8% as a percentage of total revenues from 26.1%.
This increase was primarily due to the depreciation expense related to Gateway
computers. Gateway computers were added to the Company's product line in June
2000 and are depreciated on a straight-line basis.

     Depreciation expense related to property and equipment increased to 4.8% as
a percentage of total revenues from 4.6%. This increase is primarily due to the
build-outs for new stores and remodels of acquired stores since June 30, 2000.

     Amortization of goodwill decreased to 2.2% as a percentage of total
revenues from 2.4%. This decrease is primarily a function of higher revenues.

     Cost of Prepaid Phone Service. The cost of prepaid phone service was $4.6
million or 2.8% of total revenues in fiscal year 2001 compared to $2.4 million
or 1.6% in fiscal 2000. This increase is due to the growth of the DPI business
segment.

     Salaries and Wages. Salaries and wages increased by $1.0 million to $39.0
million from $38.0 million, primarily due to the addition of acquired stores
during fiscal 2000, new stores that opened after the June quarter of fiscal year
2000 and fiscal year-to-date 2001, and DPI's salary and wage expense. Salaries
and wages decreased to 23.6% as a percentage of total revenues from 25.2%.

     Advertising. Advertising expense increased from $2.5 million to $3.9
million or 2.3% of total revenues. This was due to the use of radio advertising
this quarter.

     Occupancy. Occupancy expense increased to $11.5 million from $11.3 million
primarily due to the acquisition of stores during fiscal 2000 and new stores
that opened after the June quarter of fiscal year 2000 and fiscal year-to-date
2000.

     Other Operating Expense. Other operating expense remained consistent
between years and decreased to 24.1% as a percentage of total revenues from
26.4%. This decrease in percentage terms is primarily a function of higher
revenues leveraging more fixed-type of costs and a reduction in costs.

     In addition, during the third quarter of fiscal 2001, accounting fees,
legal fees and consulting fees related to the investigation, shareholder
litigation and audit were $2.0 million.

     Interest Expense. Interest expense increased from 4.9% to 6.6%. This
increase is due to increased debt from the prior year, higher effective interest
rate due to the existence of covenant defaults under the Company's bank credit
facility and $1.1 million in forbearance fee expenses. The increase in debt was
primarily for store acquisitions/openings, the launching of the Gateway program
and funding operating losses.

     Other Expense. Other expense increased in the third quarter of fiscal 2001.
This is a result of an adverse change in the fair market of the interest swap
portfolio resulting in an expense of $0.5 million.

     Income Tax Expense. For fiscal 2001, the Company recorded no income tax
benefit related to the operating losses due to the uncertainty of its
realization. The increase in the deferred tax asset, net of liabilities, was
$3.1 million for the quarter which was offset by a full valuation allowance.

     Net Loss. A net loss of $8.7 million was incurred in the period as a result
of the factors described above compared to a net loss in the same period last
year of $0.3 million.

COMPARISON OF NINE MONTHS ENDED JUNE 30, 2001 AND 2000 (AS RESTATED)

     Total Revenues. Total revenues increased $58.0 million, or 13.2%, to $498.7
million from $440.7 million. The increase is attributable to the inclusion of a
partial year's operations for the stores acquired and opened in fiscal 2000 and
2001, the addition of DPI revenue, and increased same store revenues offset by
the revenue lost from stores closed.


                                       13
<PAGE>   14

Stores opened in fiscal 2000 and 2001 accounted for $26.3 million, or 45.3%, of
the increase. DPI revenue accounted for $23.2 million, or 40.0%, of the
increase. The Company's same stores accounted for $15.3 million, or 26.4%, of
the increase. Stores acquired in fiscal 2000 and 2001 accounted for $5.8
million, or 10.0%, of the increase. These increases were offset by a $12.6
million loss in revenue that resulted from stores closed. Same store revenues
increased 4.0%. This increase in same store revenues is due in part to Gateway
computers and prepaid phone service added to the Company's line of products and
services during fiscal 2000. Management believes opportunities exist to provide
additional non-traditional merchandise and services to its customers.

     Depreciation and Amortization. Depreciation expense related to rental
merchandise increased to 30.3% as a percentage of total revenues from 25.6%.
This increase was primarily due to the depreciation expense related to Gateway
computers. These computers were added to the Company's product line in June 2000
and are depreciated on a straight-line basis.

     Depreciation expense related to property and equipment increased to 4.7% as
a percentage of total revenues from 4.2%. This increase is primarily due to the
build-outs for new stores and remodels of acquired stores since June 30, 1999.

     Amortization of goodwill decreased to 2.2% as a percentage of total
revenues from 2.3%. This decrease is primarily a function of higher revenues.

     Cost of Prepaid Phone Service. The cost of prepaid phone service was $14.7
million or 2.9% of total revenues during fiscal 2001. The costs have
significantly increased during fiscal 2001 due to the acquisition of DPI during
fiscal 2000 as well as the growth of the DPI business segment.

     Salaries and Wages. Salaries and wages increased by $10.0 million to $120.0
million from $110.0 million, primarily due to the addition of acquired stores
during fiscal 2000, new stores that opened after the June quarter for fiscal
year 2000 and fiscal year-to-date 2001, and DPI's salary and wage expense.
Salaries and wages decreased to 24.1% as a percentage of total revenues from
25.0%.

     Advertising. Advertising expense increased from $10.8 million to $17.0
million or 3.4% of total revenues, primarily due to the roll-out of the Gateway
program, the opening of new stores during the period, and television production
costs for the fall campaign.

     Occupancy. Occupancy expense increased to $36.2 million from $34.7 million.
This was due to the acquisitions that occurred during the last quarter of fiscal
2000, new stores that have opened during the last 12 months, and lease
terminations for stores during the first 9 months of fiscal 2001. Occupancy
expense decreased to 7.3% as a percentage of total revenues from 7.9%.

     Other Operating Expense. Other operating expense increased by $8.5 million
and decreased to 24.5% as a percentage of total revenues from 25.7%. This
decrease in percentage terms is primarily a function of higher revenues
leveraging more fixed-type of costs. This increase in dollars is primarily due
to higher rental merchandise losses, health and disability insurance costs,
utility costs, accounting fees, legal fees and consulting fees.

     For the first nine months of fiscal 2001, accounting fees, legal fees and
consulting fees related to the investigation were $ 5.9 million.

     Interest Expense. Interest expense increased from 4.8% to 6.6%. This
increase is due to the increased debt levels, the higher effective interest rate
due to the existence of covenant defaults under the Company's bank credit
facility and forbearance fee expenses of $1.6 million. The increase in debt was
primarily for store acquisitions and openings, the launching of the Gateway
program and funding operating losses.

     Other Expense. Other expense increased to $9.1 million in fiscal year 2001.
This is a result of an adverse change in the fair market value of the interest
swap portfolio resulting in an expense of $9.3 million.

     Income Tax Expense. During fiscal 2001, the Company recorded no income tax
benefit related to the operating losses due to the uncertainty of its
realization. The increase to the deferred tax asset, net of liabilities for the
nine months ended June 30, 2001, was $12.8 million which was offset with a full
valuation allowance.

     Net Loss. A net loss of $38.5 million was incurred in the period as a
result of the factors described above compared to net income in the same period
last year of $3.7 million.


                                       14
<PAGE>   15

LIQUIDITY AND CAPITAL RESOURCES

     The Company's capital requirements relate primarily to purchasing
additional rental merchandise and replacing rental merchandise that has been
sold or is no longer suitable for rent. As a result of the accounting matters
described above, the Company became in default of several of the covenants
contained in its bank credit facility and is now operating under a forbearance
agreement with its bank lenders, which expires on October 5, 2001. Currently,
the Company's ability to borrow funds is limited. The Company is in negotiations
with its bank lenders to obtain an amended credit agreement that will provide
the Company with sufficient borrowing capacity and revised loan covenants. There
can be no assurance that the Company will be successful in negotiating an
amended credit facility. If the Company cannot obtain an amended credit facility
on acceptable terms, its financial condition and results of operation would be
materially adversely affected.

     For the nine months ended June 31, 2001, the Company provided $60.3 million
from operations compared to the use of $25.3 million for the nine months ended
June 31, 2000. In the fiscal 2001 period, depreciation and amortization provided
$185.8 million, utilization of deposits provided $30.6 million and income tax
refunds provided $12.0 million offset by a net loss of $38.5 million, the
purchase of rental merchandise of $128.5 million and the reduction of accounts
payables by $29.7 million. In the fiscal 2000 period, cash was used to purchase
rental merchandise of $174.3 million offset by net income of $3.7 million and
depreciation and amortization of $142.1 million.

     Net cash used in investing activities for the nine months ended June 30,
2001, was $5.4 million compared to $36.7 million used for the nine months ended
June 30, 2000. In the fiscal 2001 period, $8.5 million was used to purchase
property and equipment offset by proceeds of $3.8 million from the sale of
stores and other assets.

     Net cash used in financing activities was $51.9 million for the nine months
ended June 31, 2001, compared to $64.8 million provided by the nine months ended
June 30, 2000. In the fiscal 2001 period, the Company paid down bank borrowings
by $51.9 million as compared to the fiscal 2000 period when the Company borrowed
$54.5 million and had proceeds from the sale of common stock of $13.0 million.

SEASONALITY AND INFLATION

     Management believes that operating results may be subject to seasonality.
The first quarter typically has a greater percentage of rentals because of
traditional holiday shopping patterns. Management plans for these seasonal
variances and takes particular advantage of the first quarter with product
promotions, marketing campaigns, and employee incentives. Because many of the
Company's expenses do not fluctuate with seasonal revenue changes, such revenue
changes may cause fluctuations in the Company's quarterly earnings.

     During the nine months ended June 30, 2001, the cost of rental merchandise,
energy costs, store lease rental expense and salaries and wages has increased
modestly. These increases have not had a significant effect on the Company's
results of operations because the Company has been able to charge commensurately
higher rental for its merchandise. This trend is expected to continue in the
foreseeable future.

RECENT ACCOUNTING PRONOUNCEMENTS

     Effective October 1, 2000, the Company adopted Statement of Financial
Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging
Activities ("SFAS No. 133"). SFAS No. 133 requires that the Company record all
derivatives on the balance sheet at fair value and establishes criteria for
designation and effectiveness of hedging relationships. The Company's credit
agreement requires that it entered into interest rate swap agreements to
mitigate or eliminate its interest rate risk as a result of its interest rates
indexed to LIBOR and prime rates.

     As a result of the Company being in default under its credit facility, it
could not effectively hedge its interest rate swaps and, therefore, did not
qualify for hedge accounting treatment. As a result of adopting SFAS No. 133 and
in accordance with the transition provisions, the Company recorded a gain of
$2.5 million to accumulated other comprehensive income. The transition amount
will be amortized into earnings over the remaining term of the interest rate
swaps of 3 to 5 years. There was no tax impact to other comprehensive income
resulting from this charge as the net deferred tax asset was reduced by $979
with an offsetting reduction to the deferred tax valuation allowance of $979.

     During the quarter, the Company recorded the ineffectiveness related to
cash flow hedges to other expense. This increased other expense by $0.5 million.

     Once its credit agreement is amended, the Company will assess on an
on-going basis whether to adopt hedge accounting treatment for its interest rate
swaps.

     The Company does not enter into derivative instruments for speculative
purposes.

     In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 142 "Goodwill and Other
Intangible Assets" ("SFAS No. 142"). SFAS No. 142 requires the cessation of
amortization of


                                       15
<PAGE>   16

goodwill and other indefinite-lived intangibles on its balance sheet. Goodwill
on the balance sheet must then be tested for impairment at least annually. The
Company expects to early adopt SFAS 142 effective October 1, 2001, but has not
determined the impact of adopting this statement.

     In June 2001, FASB issued Statement of Financial Accounting Standard No.
143 "Accounting for Asset Retirement Obligations ("SFAS No. 143"). SFAS No. 143
addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. This statement is effective for financial statements issued for fiscal
years beginning after June 15, 2002. The Company is currently evaluating the
provisions of this statement.

CAUTIONARY STATEMENT

     This report includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. See particularly Item 2,
"Management's Discussion and Analysis of Financial Condition," among others.
These statements may be identified by terms and phrases such as "anticipate",
"believe", "intend", "estimate", "expect", "continue", "should", "could", "may",
"plan", "project", "predict", "will" and similar expressions and relate to
future events and occurrences. These statements are subject to uncertainties and
other factors that could cause actual results to differ materially from such
statements. Factors that could cause actual results to differ materially from
those expressed or implied in such statements include but are not limited to:

     Rent-Way's ability to control and normalize operating expenses and to
     continue to realize operating efficiencies.

     Rent-Way's ability to make principal and interest payments on its
     high-level of outstanding bank debt.

     Rent-Way's ability to negotiate an amendment to its existing senior credit
     facility, under which it is currently in default, or to refinance the debt
     thereunder.

     The outcome of any class action and derivative lawsuits commenced against
     Rent-Way and its officers and directors and any proceedings or
     investigations involving Rent-Way commenced by governmental authorities,
     including the Securities and Exchange Commission and the United States
     Department of Justice.

     Rent-Way's ability to develop, implement, and maintain reliable and
     adequate internal accounting systems and controls.

     Rent-Way's ability to retain existing senior management and attract
     additional management employees.

     General economic, business, and demographic conditions, including demand
     for Rent-Way's products and services.

     General conditions relating to the rental-purchase industry and the prepaid
     local phone service industry, including the impact of state and federal
     laws regulating or otherwise affecting the rental-purchase transaction and
     prepaid local phone service transaction.

     Competition in the rental-purchase industry and prepaid local phone service
     industry, including competition with traditional retailers.

     Rent-Way's ability to enter into and to maintain relationships with vendors
     of its rental merchandise including its ability to obtain goods and
     services on favorable credit terms.

     Given these factors, undue reliance should not be placed on any
forward-looking statements and statements regarding Rent-Way's future prospects
and performance. Such statements speak only as of the date made. Rent-Way
undertakes no obligation to update or revise any such statements whether as a
result of new information, the occurrence of future events, or otherwise.

     A wide range of factors could materially affect future developments and
performance. A list of such factors is set forth in the Company's Annual Report
on Form 10 K/A for the year ended September 30, 2000, under the heading
"Cautionary Statement Regarding Forward Looking Statements and Future
Prospects."

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company's major market risk exposure is primarily due to possible
fluctuations in interest rates. As of June 30, 2001, the Company had $343.8
million in loans with floating interest rates indexed to current LIBOR and prime
rates. Because the floating rates expose the Company to the risk of increased
interest cost if interest rates rise, the Company began a policy in 1998 of
managing interest rate risk by utilizing interest rate swap agreements to
convert a portion of the floating interest rate loans to fixed interest rates.
As of June 30, 2001, the Company has $183.8 million in interest rate swap
agreements that lock



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<PAGE>   17


in a LIBOR rate ranging from 5.09% to 6.97%. This effectively fixes the interest
rate on $183.8 million of loans, thus hedging this risk. These interest rate
swap agreements have maturities ranging from 2002 to 2005. The market value of
the interest rate swaps will be negatively impacted by falling interest rates
and/or a flattening of the yield curve.

     Given the Company's current capital structure, including interest rate swap
agreements, there is $160.0 million, or 46.5% of the Company's total debt, in
floating rate loans. A hypothetical 1.0% change in the LIBOR rate would affect
pre-tax earnings by approximately $1.6 million.

     The Company does not enter into derivative financial instruments for
trading or speculative purposes. The interest rate swap agreements are entered
into with major financial institutions thereby minimizing the risk of credit
loss.















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<PAGE>   18

                                 RENT-WAY, INC.

PART II--OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

FEDERAL INVESTIGATIONS

     There are currently pending federal governmental investigations by the SEC
and the United States Attorney involving the Company's financial reporting.
Rent-Way is cooperating fully in these investigations. Also, as previously
discussed, the law firms of Hodgson Russ LLP and Ross & Hardies have conducted
an independent investigation of financial reporting issues. A joint interim
attorneys' report regarding this investigation date June 19, 2001, has been
conveyed to the board of directors and to management and was considered in
connection with the preparation of the Company's quarterly financial statements
and this report. The investigations are ongoing, and the Company cannot predict
their outcomes. If Rent-Way were convicted of any crime or subjected to
sanctions, substantial penalties, damages or other monetary remedies are
assessed against Rent-Way, this could have a material adverse effect on the
Company's results of operations and financial condition.

SECURITIES LITIGATION

     As of August 1, 2001, Rent-Way has been served with twelve complaints in
purported class action lawsuits filed in or transferred to the U.S. District
Court for the Western District of Pennsylvania. The complaints allege that,
among other things, as a result of accounting irregularities, the Company's
previously issued financial statements were materially false and misleading thus
constituting violations of federal securities laws by the Company and by certain
officers. The actions allege that the defendants violated Sections 10(b) and/or
Section 20(a) of the Securities Exchange Act and Rule 10b-5 promulgated
thereunder. The actions seek damages in unspecified amounts. The actions purport
to be brought on behalf of purchasers of the Company's common stock during
various periods, all of which fall between January 18, 2000, and October 30,
2000. The District Court has ordered that the actions be consolidated and on
March 9, 2001, appointed Cramer Rosenthal McGlynn, LLC, an investment advisor
that purchased the Company's common stock for the accounts of its clients to
serve as lead plaintiff and the firm of Gold, Bennett, Cera & Sidener LLP to
serve as lead counsel. The lead plaintiff must file a consolidated complaint
within 20 days of the filing of the Company's amended Annual Report on Form 10
K/A for the 2000 fiscal year. Rent-Way is currently evaluating these claims and
possible defenses thereto. Additional purported class action lawsuits similar to
those described above may be filed, and the existing complaints may be amended
to increase the purported class.

     Certain of Rent-Way's officers and directors and Rent-Way, as nominal
defendant, have been sued in a shareholder derivative action brought on behalf
of Rent-Way in the U.S. District Court for the Western District of Pennsylvania.
The derivative complaint purports to assert claims on behalf of Rent-Way against
the defendants for violation of duties asserted to be owed by the defendants to
Rent-Way and which relate to the events which gave rise to the purported class
actions described above. All proceedings in the derivative case have been
stayed, pending the resolution of the class action lawsuits.

     Rent-Way is presently unable to predict or determine the final outcome of,
or to estimate the amounts or potential range of loss with respect to, these
matters, management believes that these matters could have a material adverse
impact on the Company's financial position and results of operations.

     Pursuant to its bylaws, Rent-Way is obligated to indemnify its officers and
directors under certain circumstances against claims made in these lawsuits.
Rent-Way may also be obligated to indemnify certain of its officers and
directors for the costs they incur as a result of the investigations and
lawsuits described above.

OTHER LITIGATION

     Rent-Way is also subject to litigation in the ordinary course of business.
In the opinion of management, the ultimate outcome of any existing litigation,
other than the investigations and the lawsuits described above, would not have a
material adverse effect on the Company's financial condition or results and
operations.




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<PAGE>   19

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     As a result of the accounting matters described, the Company became in
default of several of the covenants contained in its bank credit facility
including, without limitation herein, the covenants regarding maximum leverage
ratio, minimum interest coverage ratio, minimum net worth, fixed charge coverage
ratio, and rental merchandise usage and the covenants regarding delivery of
monthly, quarterly and annual financial statements of the Company and is now
operating under a forbearance agreement with its bank lender which expires on
October 5, 2001. Currently, the Company's ability to borrow funds is limited.
The Company is in negotiations with its bank lenders to obtain an amended credit
facility that will provide the company with sufficient borrowing capacity and
revised loan covenants. There can be now assurance that the company will be
successful in negotiating an amended credit facility. If the Company cannot
obtain an amended credit facility on acceptable terms, its financial condition
and results of operations would be materially adversely affected.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

A.   EXHIBITS

     None

B.   REPORTS ON FORM 8-K

     The Company filed the following reports on Form 8-K in the quarter ended
June 30, 2001:

     (1)  Form 8-K dated April 4, 2001, filing a press release announcing the
          hiring of John A. Lombardi as Vice President, Controller and Chief
          Accounting Officer.
     (2)  Form 8-K dated April 23, 2001, filing a press release announcing the
          hiring of Roger Zwingler as Vice President of Marketing of
          Advertising.
     (3)  Form 8-K dated May 21, 2001, filing a press release announcing an
          upcoming update of its financial performance.
     (4)  Form 8-K dated May 24, 2001, filing a press release announcing
          financial performance in fiscal 2001 and an update of its expected
          fiscal 2000 performance.










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<PAGE>   20
                                 RENT-WAY, INC.

                                   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.


                                                       Rent-Way, Inc.
                                                       --------------
                                                        (Registrant)


                                           By:

        August 22, 2001                           /s/ William A. McDonnell
------------------------------             -------------------------------------
            Date                                        (Signature)
                                                   William A. McDonnell
                                                    Vice President and
                                                  Chief Financial Officer

                                           By:

        August 22, 2001                             /s/ John A. Lombardi
------------------------------             -------------------------------------
            Date                                        (Signature)
                                                      John A. Lombardi
                                                  Chief Accounting Officer
                                                        and Controller


















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