<PAGE>
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                                  UNITED STATES
                    U. S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                   FORM 10-K/A

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

                  FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2002

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

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

                         COMMISSION FILE NUMBER: 0-22026

                                 RENT-WAY, INC.

                             PENNSYLVANIA 25-1407782
                      (STATE OF INCORPORATION) (I.R.S. EIN)

                   ONE RENTWAY PLACE, ERIE, PENNSYLVANIA 16505

                                 (814) 455-5378

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

           TITLE OF CLASS                 NAME OF EXCHANGE ON WHICH REGISTERED
           --------------                 ------------------------------------
     COMMON STOCK, NO PAR VALUE              NEW YORK STOCK EXCHANGE, INC.


    SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ].

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [  ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [  ]   No [ X ]

The aggregate market value of common stock held by non-affiliates of the
registrant as of March 28, 2002, was $169,525,089.

The number of shares outstanding of the registrant's common stock as of December
19, 2002 was 25,685,538.


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



                                 RENT-WAY, INC.

                                EXPLANATORY NOTE


This Form 10-K/A is being filed to present revised Item 5 - Market for
Registrant's Common Equity and Related Stockholder Matters, Item 6 - Selected
Financial Data, and Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations.


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                           PAGE
<S>                                                                                                          <C>
 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND FUTURE PROSPECTS............................  1

PART II

     Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters........................  2
     Item 6.  Selected Financial Data......................................................................  2
     Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations........  4

PART III

     Item 15.  Exhibits.................................................................................... 13

SIGNATURES................................................................................................. 16

CERTIFICATIONS............................................................................................. 17
</TABLE>







                                      -ii-
<PAGE>


                                 RENT-WAY, INC.

 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND FUTURE PROSPECTS

     This Annual Report on Form 10-K 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, including
statements regarding Rent-Way's future prospects. 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 forward-looking 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 and to refinance
     on acceptable terms its high-level outstanding bank debt.

     The outcome of the class action and derivative lawsuits commenced against
     Rent-Way and its officers and directors and any proceedings or
     investigations involving Rent-Way and its officers and directors conducted
     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 and prepaid
     local phone service transactions.

     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.

     Rent-Way's ability to satisfy the conditions required under and to
     otherwise close the transactions contemplated by its definitive agreement
     with Rent-A-Center, Inc. to sell 295 stores, and Rent-Way's ability to
     reduce corporate-level and other expenses following the closing of such
     sale.

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



                                      -1-
<PAGE>
                                 RENT-WAY, INC.

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company's common stock is traded on the New York Stock Exchange under
the symbol "RWY." The following table sets forth, for the periods indicated, the
high and low sales prices per share of the common stock as reported on New York
Stock Exchange.
<TABLE>
<CAPTION>
                                                    YEAR ENDED                  YEAR ENDED
                                                SEPTEMBER 30, 2002          SEPTEMBER 30, 2001
                                                ------------------          ------------------
                                                HIGH         LOW               HIGH         LOW
                                                ----         ---               ----         ---
<S>                                          <C>           <C>             <C>             <C>
                First Quarter.........       $   6.97      $   5.40        $   30.25       $  2.6875
                Second Quarter........           8.45          5.27             8.27          4.00
                Third Quarter.........          13.28          8.40            10.90          5.01
                Fourth Quarter........          12.30          3.00             9.60          5.25
</TABLE>

     As of September 30, 2002, there were 278 record shareholders of Rent-Way's
common stock.

     The Company has not paid any cash dividends to shareholders. The
declaration of any cash dividends will be at the discretion of the board of
directors and will depend upon earnings, capital requirements and the financial
position of the Company, general economic conditions and other pertinent
factors. The Company does not intend to pay any cash dividends in the
foreseeable future. Management intends to use earnings, if any, to repay bank
debt and, to the extent permitted by the Company's bank lenders, to develop and
expand the Company's business. The Company's bank credit facility prohibits the
payment of dividends.

     The Company maintains the 1992, 1995, and 1999 Stock Option Plans pursuant
to which options to purchase shares of common stock are outstanding and may be
granted in the future. The Company also has options to acquire common stock
outstanding under stock option plans assumed in connection with the Company's
acquisition of Home Choice Holdings, Inc. in December 1998. The Company also has
individual option award agreements outside of these plans with four employees
covering an aggregate of 80,000 options to acquire shares of common stock. These
non-plan options are evidenced by written agreements and have the following
terms: expiration is five years from option grant date (June 13, 2002), vesting
is one-half on grant date, one-half on first anniversary of grant date; the
options terminate immediately on termination of employment except in the event
of death, disability or involuntary termination, in which case they are
exercisable (to the extent exercisable at termination) for an additional three
months.

<TABLE>
<CAPTION>
                                                                                                            Number of securities
                                                                                                          remaining available for
                                              Number of securities to be         Weighted-average         future issuance under
                                               issued upon exercise of           exercise price of       equity compensation plans
                                                outstanding options,           outstanding options,        (excluding securities
               Plan category                     warrants and rights            warrants and rights      reflected in column (a))
               -------------                  --------------------------       --------------------      ------------------------
                                                          (a)                           (b)                         (c)
<S>                                                       <C>                 <C>                                  <C>
Equity compensation plans approved by                     3,500,811                    $13.22                     848,411
security holders..................

Equity compensation plans not approved by                   156,420                    $12.44                         --
security holders (1)..............
                                                          ---------                    ------                     -------
Total.............................                        3,657,231                    $13.98                     848,411
</TABLE>



(1)  Reflects the shares to be issued upon exercise of outstanding options under
     the stock option plans assumed by the Company upon the acquisition of Home
     Choice Holdings, Inc. in December 1998.


ITEM 6.  SELECTED FINANCIAL DATA


    The following selected financial data for the years ended September 30,
1998, 1999, 2000, 2001 and 2002, were derived from the audited financial
statements of the Company for those periods. All periods prior to the year ended
September 30, 1999, reflect the Company's merger with Home Choice in December
1998, which was accounted for as a pooling of interests. The historical
financial data are qualified in their entirety by, and should be read in
conjunction with, Management's Discussion and Analysis




                                      -2-
<PAGE>

of Financial Condition and Results of Operations and the financial statements of
the Company and notes thereto included elsewhere in this report.
<TABLE>
<CAPTION>
                                                                                     YEAR ENDED SEPTEMBER 30,
                                                             -----------------------------------------------------------------------
                                                               1998(1)(2)      1999(3)       2000(4)         2001          2002
                                                               ----------      -------       -------         ----          ----
                                                                          (Dollars in millions, except per share data)
<S>                                                          <C>           <C>              <C>           <C>           <C>
STATEMENT OF OPERATIONS DATA:
  Total revenues........................................        $436,031      $494,352        $592,686      $654,618      $626,429
  Operating profit (loss)...............................           8,589        24,674             596       (10,237)       31,850
  Income (loss) before cumulative effect of change in
    accounting principle and extraordinary item.........          (5,819)         (246)        (28,041)      (63,625)      (31,577)
  Net income (loss).....................................          (5,819)         (765)        (28,041)      (63,625)      (76,472)
  Adjusted net income (loss) (5)........................           5,429         9,072         (14,471)      (50,934)      (76,472)

  Basic:
    Income (loss) before cumulative effect of change in
      accounting principle and extraordinary item.......        $ (0.29)      $   (0.01)      $ (1.20)      $(2.60)       $  (1.26)
    Net income (loss)...................................        $ (0.29)      $   (0.04)      $ (1.20)      $(2.60)       $  (3.06)
    Adjusted net income (loss) (5)......................        $   .27       $     .43       $  (.62)      $(2.08)       $  (3.06)

  Diluted:
    Income (loss) before cumulative effect of change in
      accounting principle and extraordinary item.......        $ (0.29)      $   (0.01)      $ (1.20)      $(2.60)       $  (1.26)
    Net income (loss)...................................        $ (0.29)      $   (0.04)      $ (1.20)      $(2.60)       $  (3.06)
    Adjusted net income (loss) (5)......................        $   .30       $     .47       $  (.62)      $(2.08)       $  (3.06)

  Weighted average shares outstanding (in thousands):
    Basic...............................................          20,283        21,341          23,314        24,501        25,021
    Diluted.............................................          20,283        21,341          23,314        24,501        25,021
BALANCE SHEET DATA:
  Rental merchandise, net...............................        $175,085      $196,510        $282,052      $218,973      $196,064
  Total assets..........................................         487,536       609,658         766,311       628,177       510,794
  Debt..................................................         179,603       288,130         387,852       307,009       277,207
  Shareholders' equity..................................         244,090       258,487         267,822       206,042       136,597
</TABLE>

1) The year ended September 30, 1998, reflects the combination of the preceding
twelve-month financial periods for each of Rent-Way and Home Choice.

2) During the year ended September 30, 1998, the Company acquired 250
rental-purchase stores, 50 of which were acquired in January 1998 from Ace
Rentals and 145 of which were acquired in February 1998 from Champion, which
affects the comparability of the historical financial information for the
periods presented.

3) During the year ended September 30, 1999, the Company acquired 275
rental-purchase stores, 250 of which were acquired in September 1999 from
RentaVision, which affects the comparability of the historical financial
information for the periods presented.

4) During the year ended September 30, 2000, the Company acquired 24
rental-purchase stores and a 70% interest in DPI, which affects the
comparability of the historical financial information for the periods presented.

5) The adjusted net income (loss) reflects previously reported net loss adjusted
for goodwill amortization added back as if SFAS 142 had been adopted.



                                      -3-
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

RECENT DEVELOPMENTS

     On December 17, 2002, the Company entered into a definitive purchase
agreement to sell 295 stores to Rent-A-Center, Inc. for $101.5 million, subject
to downward adjustment for store performance prior to closing. The stores are
located in 38 states and had aggregate average monthly revenues for the three
months ended October 31, 2002, of approximately $10.1 million. Closing of the
transaction contemplated by the definitive purchase agreement is subject to
several conditions, including clearance under the Hart-Scott-Rodino Act and
other customary conditions. As required under the Company's credit facility, all
proceeds of the sale, net of transaction, store closing and similar expenses,
will be used to pay outstanding bank debt. Of the approximate $101.5 million
sale price, an aggregate of $10 million is subject to a holdback by
Rent-A-Center to secure the Company's indemnification obligations--$5 million
for 90 days and $5 million for 18 months. A copy of the definitive purchase
agreement is filed as Exhibit 2.11 to this annual report. Following completion
of the sale, the Company will operate 766 stores in 33 states.

OVERVIEW

     Rent-Way is the second largest operator in the rental-purchase industry
with 1,062 stores in 42 states as of September 30, 2002. The Company offers
quality brand name home entertainment equipment, furniture, appliances,
computers, 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
DPI. Segment information for the Company is presented in Note 19 of the notes to
the financial statements included in this report. The Company has not presented
separate information in this Item 7 regarding its prepaid telephone service
segment except in the discussion of total revenues and operating income. The
Company believes that other items for its prepaid telephone service segment are
immaterial.

     The results of operations are affected by the current economic conditions.
Business is also driven, in part, by the level of spending by our customers. The
ability to identify and capitalize on market changes early in their cycles is a
key driver of performance. The Company's cost-management strategy is to
anticipate changes in demand for services and to identify cost-management
initiatives in order to manage costs as a percentage of revenues.

     Revenues are driven by the ability to both expand current customer base by
securing new agreements with new customers while maintaining existing customer
agreements. The ability to add value to customers, and therefore drive revenues,
depends in part on the ability to offer quality, market-leading products and to
serve customers with a skilled team of professionals.

     Cost of services is primarily driven by the cost of rental merchandise and
the cost of personnel, the latter of which consists mainly of compensation and
benefits. Cost of rental merchandise as a percentage of revenues is driven by
maintaining quality product mix, availability and keeping rental merchandise on
active rental agreements. Sales and marketing expense is driven primarily by
business development activities; the development of new service offerings; the
level of concentration of customers in a particular market; and
customer-targeting, image-development and brand-recognition activities. General
and administrative costs primarily include costs for personnel who do not work
directly with the customer, information systems and office space. The Company
seeks to manage these areas in line with changes in activity levels in the
business.

     Current economic conditions continue to cause pricing pressures from
competitors. The Company believes these conditions have also resulted in a
higher than anticipated number of customers being unable to continue their
rental contracts for personal financial reasons. The Company is positioning to
achieve revenue growth through improved product selection and competitive
marketing initiatives. Further, the long-term impact of the current economic
environment and pricing pressures of the competitive markets can not be
predicted. The Company strives to improve management of costs.

     The Company's cost-management strategy is to anticipate changes in demand
for services and to identify initiatives that may generate cost management as a
percentage of revenues. Store-count is managed to meet the anticipated demand,
and programs have been implemented to enable the Company to maintain or improve
consolidated operating margins, excluding one-time charges.

     Rental-Purchase Acquisitions and Store Openings. Through sales, closures
and combinations, the number of stores operated by the Company has decreased
from 1,138 as of September 30, 2000, to 1,062 as of September 30, 2002. The
following table shows the number of stores opened, acquired, sold, closed and/or
combined during this three-year period.



                                      -4-
<PAGE>

<TABLE>
<CAPTION>
                                                                           YEARS ENDED SEPTEMBER 30,
                                                                 -----------------------------------
                            STORES                                    2000           2001           2002
                                                                 -------------  -------------  ---------
<S>                                                                  <C>            <C>            <C>
                   Open at Beginning of Period................       1,114          1,138          1,087
                   Opened.....................................          68             32              0
                   Acquired...................................          24              2              0
                   Locations Sold.............................          (4)           (39)           (15)
                   Closed or Combined.........................         (64)           (46)           (10)
                                                                 ---------      ---------      ---------
                   Open at End of Period......................       1,138           1,087         1,062
                                                                 =========      ==========     =========
</TABLE>

     Fiscal 2002 Acquisitions. The Company did not open any new stores or make
any new store acquisitions during fiscal 2002.

     Fiscal 2002 Store Sales, Swaps and Closures or Combinations. During fiscal
2002, the Company sold six stores in several transactions in exchange for $0.8
million in cash. The Company recognized a gain of $0.4 million and sold assets
with a net book value of $0.4 million as a result of these transactions.

     The Company also entered into asset purchase and exchange agreements
whereby the Company exchanged nine stores and approximately $0.1 million in cash
for the rental merchandise and rental contracts of ten stores. The Company
recognized a gain of approximately $0.5 million and exchanged assets with a net
book value of $0.8 million.

     In October 2001, the Company purchased, in exchange for $0.3 million in
cash, customer agreements and active rental merchandise that were combined with
an existing store. There was no gain or loss on the transaction.

    In addition to the store information discussed above, the following matters
should be considered in connection with the discussion of results of operations
and financial condition:

     -    The Company incurred substantial accounting and legal fees in fiscal
          2001 in connection with its accounting investigation and fiscal 2000
          audit. The Company incurred $7.9 million of these expenses in fiscal
          2001. In fiscal 2002 there was a $1.9 million reimbursement of
          accounting and legal fees as a result of an insurance recovery. This
          recovery offset fiscal 2002 expenses of $1.3 million, resulting in
          income of $0.6 million. The Company anticipates incurring additional
          legal and other expenses in connection with the class action
          litigation and governmental investigations which are ongoing.

     -    The Company took actions in fiscal 2001, which had the effect of
          significantly reducing operating income, but which management believes
          were necessary. Among the actions taken were (1) identifying store
          merchandise that did not generate normal industry margins and
          disposing of it, by lowering cash purchase prices or rental rates and
          terms, (2) writing off approximately $2.1 million of store merchandise
          that could not be sold or rented on these lower terms or met certain
          age or condition criteria, (3) closing or combining 46 stores which
          resulted in charges for early termination of store leases and fixed
          asset write-offs of approximately $4.3 million.

     -    The Company recorded changes in its interest rate swap portfolio of
          $0.5 million gain and ($12.6) million loss in fiscal 2002 and fiscal
          2001, respectively, in accordance with Statement of Financial Standard
          No. 133 (See Note 10 to the Company's financial statements at Item 8).

     -    Effective October 1, 2001, the Company adopted Statement of Financial
          Accounting Standards No. 142 ("SFAS 142"), "Goodwill and Other
          Intangible Assets." Thus, no amortization for such goodwill and
          indefinite-lived intangibles was recognized in the accompanying
          Consolidated Statements of Operations for fiscal year ended September
          30, 2002, compared to $12.7 million for the year ended September 30,
          2001. At September 30, 2002, the Company calculated an impairment to
          goodwill of $58.9 million, recorded in "Cumulative Effect of Change in
          Accounting Principle" in the amount of $41.5 million (net of $17.4
          million in income taxes). (See Note 4 to the Company's financial
          statements at Item 8).

USE OF ESTIMATES IN FINANCIAL STATEMENTS

    The preparation of the consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates. On an ongoing basis, management reviews its



                                      -5-
<PAGE>

estimates, including those related to litigation, liability for self-insurance,
impairment of goodwill and other intangibles, based on currently available
information. Changes in facts and circumstances may result in revised estimates.

SIGNIFICANT ACCOUNTING POLICIES

     Revenue. Rental merchandise is rented to customers pursuant to rental
agreements, which provide for either weekly, biweekly, semi-monthly or monthly
rental payments collected in advance. Revenue is recognized as collected, not
over the rental term, since at the time of collection the rental merchandise has
been placed in service and costs of installation and delivery have been
incurred. This method of revenue recognition does not produce materially
different results than if rental revenue was recognized over the weekly,
biweekly, semi-monthly or monthly rental term.

     Rental Merchandise Depreciation. The Company uses the units of activity
depreciation method for all rental merchandise except computers. Under the units
of activity method, rental merchandise is depreciated as revenue is collected or
earned during free-rent promotions. Thus rental merchandise is not depreciated
during periods when it is not on rent and therefore not generating rental
revenue. Personal computers, added to the Company's product line in June 1999,
are principally depreciated on the straight-line basis beginning on acquisition
date over 12 months to 24 months, depending on the type of computer. Write-offs
of rental merchandise arising from customers' failure to return merchandise,
obsolescence and losses due to excessive wear and tear of merchandise are
recognized using the direct write-off method, which is materially consistent
with the results that would be recognized under the allowance method. The
Company reviews this analysis from time to time in order to make this
determination.

     Prepaid Phone Service. Prepaid phone service is provided to customers on a
prepaid month-to-month basis. Prepaid phone service revenues are comprised of
monthly service revenues and activation revenues. Monthly service revenues are
recognized on a straight-line basis over the related monthly service period,
commencing when the service period begins. The cost of monthly service is also
recognized over the monthly service period and is included in "cost of prepaid
phone service" in the Statement of Operations. Activation revenues and costs are
recognized on a straight-line basis over the average estimated life of the
customer relationship. The Company reviews the average estimated life of the
customer from time to time in making this determination.

     Closed Store Reserves. From time to time, the Company closes or
consolidates retail stores. An estimate is recorded of the future obligation
related to closed stores based upon the present value of the future lease
payments and related commitments, net of estimated sublease income. If the
estimates related to sublease income are not correct, the actual liability may
be more or less than the liability recorded, and the Company adjusts the
liability accordingly.

     Company Insurance Programs. The Company is primarily self-insured for
health, workers' compensation, automobile, and general liability costs. The
self-insurance liability for health costs is determined actuarially based on
claims filed and an estimate of claims incurred but not yet reported. The
self-insurance liability for workers' compensation, automobile and general
liability costs are determined actuarially based on claims filed and company
experience. Losses in the workers' compensation, automobile and general
liability programs are pre-funded based on the insurance company's loss
estimates. Loss estimates will be adjusted for developed incurred losses at 18
months from policy inception and every 12 months thereafter. Retrospective
adjustments to loss estimates are recorded when determinable and probable.

     Income Taxes. Deferred income taxes are recorded to reflect the tax
consequences on future years of differences between the tax and financial
statement basis of assets and liabilities at year end using income tax rates
under existing legislation expected to be in effect at the date such temporary
differences are expected to reverse. A valuation allowance is provided for
deferred tax assets if it is more likely than not that these items may expire
before the Company is able to realize their benefit, or that future
deductibility is uncertain. Deferred income taxes are adjusted for tax rate
changes as they occur.

     Goodwill. Effective October 1, 2001, the Company adopted Statement of
Financial Accounting Standards No. 142 ("SFAS 142"), "Goodwill and Other
Intangible Assets." SFAS 142 requires that intangible assets not subject to
amortization and goodwill be tested for impairment annually, or more frequently
if events or changes in circumstances indicate that the carrying value may not
be recoverable. Amortization of goodwill and intangible assets with indefinite
lives, including such assets recorded in past business combinations, ceased upon
adoption. Thus, no amortization for such goodwill and indefinite-lived
intangibles was recognized in the accompanying Consolidated Statements of
Operations for fiscal year ended September 30, 2002, compared to $12.7
millionfor the year ended September 30, 2001. At September 30, 2002 the Company
calculated an impairment to goodwill of $58.9 million, recorded in "Cumulative
Effect of Change in Accounting Principle" in the amount of $41.5 million (net of
$17.4 million in income taxes). (See Note 4.)



                                      -6-
<PAGE>

RESULTS OF OPERATIONS

     As an aid to understanding the Company's operating results, the following
table expresses certain items of the Company's Consolidated Statements of
Operations for the years ended September 30, 2002, 2001 and 2000 as a percentage
of total revenues.
<TABLE>
<CAPTION>
                                                                                   YEARS ENDED SEPTEMBER 30,
                                                                             2002            2001            2000
                                                                         ------------    ------------    --------
<S>                                                                      <C>             <C>             <C>
             Revenues:
              Rental.................................................          81.3%           80.8%           84.2%
               Prepaid phone service.................................           6.0             5.3             1.5
               Other.................................................          12.7            13.9            14.3
                                                                         ----------      ----------      ----------
                  Total revenues.....................................         100.0           100.0           100.0
             Costs and operating expenses:
               Depreciation and amortization:
                 Rental merchandise..................................          28.0            30.7            26.6
                 Property and equipment..............................           4.2             4.8             4.3
                 Amortization of intangibles.........................           0.4             2.2             2.3
               Cost of prepaid phone service.....                               3.8             3.1             1.0
               Salaries and wages....................................          24.6            24.3            25.5
               Advertising, net......................................           4.5             3.2             3.4
               Occupancy.............................................           7.1             7.8             7.7
               Other operating expense...............................          22.5            25.5            29.1
                                                                         ----------      ----------      ----------
                  Total costs and operating expenses.................          95.1           101.6            99.9
               Operating income (loss)...............................           4.9            (1.6)            0.1
               Interest expense......................................          (7.7)           (6.3)           (5.0)
               Interest income.......................................           0.1               --             --
               Equity in loss of subsidiary..........................            --               --           (0.1)
               Amortization--deferred financing costs................          (0.2)           (0.2)           (0.1)
               Other income (expenses), net..........................           0.4            (1.6)            0.3
                                                                         ----------      ----------      ----------
               (Loss) before income taxes, cumulative effect of change
                   in accounting principle and extraordinary item....          (2.5)           (9.7)           (4.8)
               Income tax expense (benefit)..........................           2.6              --            (0.1)
                                                                         ----------      ----------      ----------
               (Loss) before cumulative effect of change in accounting
                   principle and extraordinary item..................          (5.1)           (9.7)           (4.7)
               Cumulative effect of change in accounting principle...          (6.6)             --              --
               Extraordinary item....................................          (0.5)             --              --
                                                                         ----------      ----------      ----------
                  Net (loss).........................................         (12.2)%          (9.7)%          (4.7)%
                                                                         ==========      ==========      ==========
</TABLE>

FISCAL 2002 COMPARED TO FISCAL 2001

     Total Revenues. Total revenues decreased $28.2 million or 4.5%, to $626.4
million from $654.6 million. This decrease is attributable to a decrease in
revenues of $31.2 million in the household rental segment offset by an increase
in revenues of $3.0 million in the prepaid telephone service segment. The $31.2
million decrease in revenue in the household rental segment is due to a 1.9%
decrease in same store revenues and the closing or selling of 25
under-performing stores since September 30, 2001.

     Same store rental revenues decreased 0.7% as compared to the same period
last year. This decrease is primarily due to a decrease in total deliveries for
the year ended September 30, 2002, as compared to the same period last year. It
should be noted that the deliveries made in the year ended September 30, 2002,
have better revenue potential than the lower-end items delivered in the past.
Same store processing and insurance fee revenues decreased 8.9% as compared to
the prior year. This is attributed to reductions in the Company's collection of
liability damage waiver and processing fees. Same store early purchase option
and sales revenue decreased 5.2% as compared to the same period last year. The
prior fiscal year had a significant amount of product sales to eliminate
lower-end, lower-margin merchandise from the Company's product mix. The Company
lowered cash purchase prices on merchandise identified as generating margins
lower than industry norms.

     Depreciation and Amortization. Depreciation expense related to rental
merchandise decreased to 28.0% as a percentage of total revenues from 30.7%. In
fiscal 2002, the Company took steps to increase gross profit margins on rental
contracts. These steps included introducing higher-end, higher-margin
merchandise to the stores, increasing rental rates on certain core products to
competitive market rates, increasing weekly rental rates of personal computers
to competitive market rates, and implementing a program to eliminate free
Internet service by replacing it with a prepaid, unlimited Internet product. The
Company expects depreciation expense as a percentage of total revenues to
continue decreasing as product margins improve due to enhanced rental rates and
turns as a result of the factors discussed above.



                                      -7-
<PAGE>

     Amortization of goodwill and other intangibles decreased to 0.4% as a
percentage of total revenues from 2.2%. This decrease is due to the adoption of
Statement of Financial Accounting Standards No. 142 ("SFAS No. 142"). SFAS No.
142 requires the cessation of amortization of goodwill and other
indefinite-lived intangibles on the balance sheet. Goodwill and other indefinite
lived intangibles on the balance sheet must then be tested for impairment at
least annually. The Company completed step one, the transitional goodwill
impairment test and determined that goodwill is impaired in the household rental
segment. Such testing resulted in a goodwill impairment charge recorded in
"Cumulative Effect of Change in Accounting Principle" in the Consolidated
Statement of Operations as a loss of $41.5 million (net of $17.4 million in
income taxes).

     Cost of Prepaid Phone Service. The cost of prepaid phone service increased
to $23.7 million, or 3.8% of total revenues, from $20.0 million, or 3.1% as a
percentage of total revenues. Cost of prepaid phone service, as a percentage of
prepaid phone service revenues, increased to 62.8% from 57.5%. This increase is
primarily due to the growth in the number of customer lines serviced and an
increase in the mix of new customers to the total customer base. The increase in
new customers results in higher costs due to ILEC activation fees. This increase
is also the result of the FCC allowing the ILECs to increase EUCL monthly
charges for residential lines during mid-year calendar 2001. The Company has
reacted to the EUCL increases by adjusting retail prices to the customer based
on targeted margins. These price increases were implemented in the first quarter
of fiscal 2002.

     Salaries and Wages. Salaries and wages decreased by $5.0 million due to the
Company's continued effort to better manage store staffing levels and overtime
and the result of a reduction of corporate staffing levels.

     Advertising. Advertising expense increased $7.1 million, from $20.8 million
in 2001 to $27.9 million in 2002. Included in this increase is an additional
$4.4 million for air-time, $2.7 million in distribution costs, consisting
primarily of postage, and $1.5 million for the advertising campaign titled "Fall
Kickoff Extravaganza". In addition, there was a reduction in advertising rebates
resulting in an increase of net advertising costs by $2.2 million. Offsetting
this increase was a decrease in production costs of $3.7 million.

     Other Operating Expenses. Other operating expense decreased by $23.5
million to $140.8 million from $164.3 million. This decrease is primarily due to
lowered rental merchandise losses of $8.6 million, lowered service costs of $3.1
million, lowered telephone costs of $1.3 million, lowered training and
conference costs of $1.0 million, lowered utilities costs of $1.8 million,
lowered Club Plan expense of $1.3 million, lowered accounting fees of $1.7
million, and lowered legal and professional fees of $8.2 million. For fiscal
2002 and 2001, accounting fees, legal fees and consulting fees related to the
fiscal 2000 audit and investigation were $1.3 and $7.9 million, respectively.
During fiscal 2002, the Company was reimbursed $1.9 million as a result of an
insurance recovery.

     The decrease in other operating expense was partially offset by a charge of
$4.6 million against income consisting of a $3.6 million retrospective upward
adjustment of the Company's fiscal 2001 property/casualty insurance premium and
a $1.0 million upward adjustment of the Company's pre-2001 property/casualty
insurance premium reserves.

     Interest Expense. Interest expense increased $6.5 million from 6.3% to 7.7%
of total revenues. The Company's credit facility requires the Company to accrue
additional payment-in-kind interest at a rate of 200 to 500 basis points that is
due and payable on the maturity date of its term loans. This payment-in-kind
interest amounted to $15.0 million in fiscal 2002. Offsetting this increase is a
decrease in other interest expense of $6.2 million. This decrease is due to a
lower effective interest rate. In the comparable period in fiscal 2001, the
Company was in default under the bank credit facility and operated under a
forbearance agreement.

     Other Income (Expense), Net. Other income was $2.4 million in fiscal 2002
compared to other expense of $10.8 million for fiscal 2001. This change is
primarily due to a positive change in the fair market value of the interest rate
swap portfolio, which resulted in income of $0.5 million for the year ended
September 30, 2002, compared to an adverse change of $12.6 million for 2001.
Other income for fiscal 2002 includes gain on the sale of stores. The Company
entered into several small transactions to sell fifteen under-performing stores.
The Company recognized a net gain of $0.9 million on these store sale
transactions.


     Income Tax Expense. For the year ended September 30, 2002, the Company
recorded income tax expense of $16.5 million in connection with the adoption of
SFAS 142 and recording local income taxes. SFAS 142 stops the amortization of
goodwill for book purposes, but for tax purposes it continues to be deductible
and amortizable in accordance with the current tax laws. The income tax expense
for fiscal 2002 attributable to the impact of SFAS 142 adoption results from an
increase to the valuation allowance because the Company can no longer look to
the reversal of the deferred tax liability associated with the tax deductible
goodwill to offset its deferred tax assets in accordance with SFAS 109
"Accounting for Income Taxes." The impact of the continued tax-deductible
goodwill will result in tax expense in future years to the extent the Company
has a full valuation allowance. The Company recorded no income tax benefit for
fiscal 2002 and 2001 related to the operating losses due to the uncertainty of
its realization. There was no tax benefit since all opportunities for loss
carrybacks have been previously utilized. There are approximately $10.9 million
of net operating losses


                                      -8-
<PAGE>


that expire during fiscal years 2005 through 2018. Net operating losses
approximating $43.1 million, $36.4 million, $48.1 million and $28.2 million
expire during fiscal years 2019, 2020, 2021 and 2022, respectively. The net
deferred tax asset of $63.9 million for fiscal 2002 and the net deferred tax
asset of $34.2 million for fiscal 2001 has been fully offset by a valuation
allowance based on management's determination that it is more likely than not
that the deferred tax assets may not be realized. The Company's federal and
state tax benefit for fiscal 2002 and fiscal 2001 is lower than the statutory
rate primarily due to the deferred tax valuation allowance and nondeductible
goodwill.


     Cumulative Effect of Change in Accounting Principle. Effective October 1,
2001, the Company adopted Statement of Financial Accounting Standards No. 142
("SFAS 142"), "Goodwill and Other Intangible Assets." SFAS 142 requires that
intangible assets not subject to amortization and goodwill be tested for
impairment annually, or more frequently if events or changes in circumstances
indicate that the carrying value may not be recoverable. Amortization of
goodwill and intangible assets with indefinite lives, including such assets
recorded in past business combinations, ceased upon adoption. Thus, no
amortization for such goodwill and indefinite-lived intangibles was recognized
in the accompanying Consolidated Statements of Operations for fiscal year ended
September 30, 2002, compared to $12.7 million for the year ended September 30,
2001. At September 30, 2002 the Company calculated an impairment to goodwill of
$58.9 million, recorded in "Cumulative Effect of Change in Accounting Principle"
in the amount of $41.5 million (net of $17.4 million in income taxes).

     Extraordinary Item. The Company amended its credit facility due to the
refinancing of its senior credit facility on October 5, 2001. As a result of
amending the credit facility, the Company wrote off a portion of the bank fees
associated with previous amendments to the credit facility. The amount of $3.4
million was the deferred finance cost related to the term loans and was recorded
as an extraordinary item in fiscal 2002.

FISCAL 2001 COMPARED TO FISCAL 2000

     Total Revenues. Total revenues increased $61.9 million, or 10.4%, to $654.6
million from $592.7 million. The increase is attributable to the inclusion of a
full year's results for the stores acquired and opened in fiscal 2000, a full
year's results for DPI, and increased revenues in the Company's core stores. DPI
revenue accounted for $25.5 million, or 41.2%, of the increase. Stores acquired
in fiscal 2000 acquisitions accounted for $5.7 million, or 9.2%, of the
increase. Stores opened in fiscal 2000 and 2001 accounted for $30.3 million, or
48.9%, of the increase. The Company's core stores accounted for $13.7 million,
or 22.1%, of the increase. These increases were offset by a loss of $14.0
million in revenue that resulted from closed, combined, and sold stores. Same
store revenues increased 2.0%. This increase in same store revenues is primarily
due to increased computer revenues, prepaid phone service revenues, and
merchandise sales revenue.

     Depreciation and Amortization. Depreciation expense related to rental
merchandise increased to 30.7% as a percentage of total revenues from 26.5%.
This increase is primarily due to the depreciation expense related to computers
and the merchandise reduction initiatives undertaken by the Company. Computers
(Gateway computers were added to the Company's product line in June 2000) are
depreciated on a straight-line basis over 12 to 24 months, depending on the type
of computer. In late fiscal 2001, the Company undertook merchandise reduction
sales initiatives to rid the system of lower margin merchandise. As a result of
this initiative, the margin on merchandise sales decreased. In fiscal 2001, the
Company recorded merchandise sales of $14.2 million with a remaining value on
items sold of $18.4 million, or a loss of ($4.2) million. In fiscal 2000, the
Company recorded sales of $12.3 million with a remaining value of $10.9 million,
or a margin of $1.4 million. The remaining value of merchandise sold is included
in depreciation expense.

     Depreciation expense related to property and equipment increased to 4.8% as
a percentage of total revenues from 4.3%. This increase is due to the build-outs
for new stores and remodels for stores acquired since June 2000.

     Salaries And Wages. Salaries and wages increased by $8.0 million to $158.9
million from $150.9 million primarily due to the addition of a full year's
salaries and wages for stores opened and acquired in 2000. Salaries and wages
decreased to 24.3% as a percentage of total revenues from 25.5%. This decrease
is due to the Company's efforts to better manage store staffing levels and
overtime. It is also the result of a reduction in corporate staffing levels.

     Occupancy. Occupancy expense increased to $51.3 million from $45.8 million
primarily due to the addition of the stores opened and acquired in fiscal 2001.
This increase is also due to $3.0 million recorded in association with lease
terminations for the stores closed, combined or sold.

     Other Operating Expenses. Other operating expenses decreased by $5.7
million and decreased to 25.5% as a percentage of total revenue from 29.1%. The
decrease in other operating expenses includes decreases in write-offs of
property and equipment, payroll



                                      -9-
<PAGE>
taxes, state and local taxes, training and conference expenses, and postage.
Offsetting these reductions in other operating expenses are increased
accounting, legal and professional fees. The Company has incurred greater fees
for these services as a result of the investigations into the accounting
improprieties. These accounting and legal fees amounted to $7.9 million in 2001.

     Operating Income (Loss). Operating income declined to a loss of $10.2
million in 2001 as compared to operating income of $0.6 million in 2000. The
household rental segment had an operating loss of $14.0 million while the
prepaid telephone service segment had an operating income of $3.8 million. The
cumulative decrease is the result of the factors discussed above.

     Interest Expense. Interest expense increased to 6.5% from 5.0% of total
revenues. $10.6 million of this increase is due to a higher effective interest
rate charged during the period the Company was in default under its bank credit
facility and $2.6 million was forbearance fees expense.

     Other Income (Expense), Net. Other expense was $10.8 million in fiscal 2001
compared to income of $1.7 million in fiscal 2000. In fiscal 2001, the Company
adopted SFAS No. 133. Under SFAS No. 133, the Company was required to record the
fair value of its interest rate swaps as an asset. On October 1, 2000, an asset
was recorded in the amount of $2.5 million. An adverse change in fair value of
the interest rate swap portfolio amounting to $12.6 million for the year ended
September 30, 2001, was charged to other expense. Offsetting this amount are
gains on the sale of stores. The Company entered into several small transactions
to sell 39 under-performing stores. The Company recognized a net gain of $2.1
million on the store sale transactions.

     Income Tax Expense. In fiscal 2001, the tax benefit for losses has been
fully offset by the valuation allowance. There is no tax benefit since all
opportunities for loss carry backs have been previously utilized. In fiscal
2000, a tax benefit of $.2 million was recorded. The net deferred tax asset of
$34.2 million for fiscal 2001 and the net deferred tax asset of $10.0 million
for fiscal 2000 have been fully offset by a valuation allowance based on
management's determination that it is more likely than not, that the net
deferred tax assets may not be realized. The Company's federal and state tax
benefit in fiscal 2001 and fiscal 2000 is lower than the statutory rate
primarily due to the deferred tax valuation allowance and nondeductible
goodwill.

LIQUIDITY AND CAPITAL RESOURCES

     The Company announced on December 17,2002, that it had entered into a
definitive purchase agreement to sell 295 of its stores to Rent-A-Center, Inc.
The transaction is expected to close in the second quarter of fiscal 2003. All
proceeds from the sale, net of transaction costs, store closing and similar
expenses, will be used to pay existing bank debt. This sale will allow the
Company to significantly reduce debt and improve its leverage and cash flow
ratios. The Company believes that this transaction will improve its ability to
refinance its outstanding bank debt on more favorable terms.

     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. Our principal sources of liquidity are
cash flows from operations, debt capacity available under the credit facility
and available cash reserves. Cash flow generated by operating activities in
fiscal 2002 was $48.7 million. Cash and cash equivalents totaled $7.3 million
and total debt was $277.2 million at September 30, 2002.

     The Company generated $48.7 million in cash from operating activities in
fiscal 2002 compared to $94.6 million in cash in fiscal 2001. This decrease is
principally due to an increase in the net loss of ($12.9) million adjusted for
non-cash items in fiscal 2002. The adjustments result in net cash provided of
$18.5 million. The fiscal 2002 non-cash items consist of goodwill impairment
charge of $58.9 million, decrease in depreciation and amortization of ($42.7)
million and a write off of deferred financing costs of $3.8 million. This $5.6
million provided by operations was offset by increased rental merchandise
purchasing activity ($11.2) million, decrease in vendor deposits used ($29.3)
million, reduction in tax refunds received ($8.4) million, and reduction in
proceeds from year over year ($2.1) million.

     Net cash used in investing activities increased $8.4 million to $10.3
million in fiscal 2002 compared to $1.9 million in fiscal 2001. In fiscal 2002,
the Company used $11.4 million for the purchase of property and equipment. This
was offset by proceeds from the sale of assets of $2.2 million. In fiscal 2001,
capital expenditures included the acquisition of two stores, the opening of 21
stores and the selling of 39 stores in several transactions. The Company funded
this project with borrowings on its senior credit facility. The Company used
$41.6 million in cash in financing activities in fiscal 2002 compared to $92.8
million in fiscal 2001. The Company used operating cash flow to pay down debt.

     During early fiscal 2001, as a result of the accounting improprieties, the
Company became in default of several of the covenants contained in its bank
credit facility including, without limitation, the covenants regarding maximum
leverage ratio, minimum interest



                                      -10-
<PAGE>

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. The Company operated under forbearance agreements
with its bank lenders through October 5, 2001. The Company's ability to borrow
funds under these forbearance agreements was limited. The Company obtained an
amended credit facility on October 5, 2001, that provided the Company with
sufficient borrowing capacity and revised loan covenants through December 2003.

     The amended credit 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, provided for loans and letters of credit up to $363.5 million consisting
of revolving loans and letters of credit of up to a maximum of $75.0 million and
varying based on the applicable period, and two term loans designated as Term
Loan A for $117.5 million and Term Loan B for $171.0 million. Borrowings under
the credit facility bear interest at the Company's option either at a base rate
or a euro-rate. The credit facility expires December 31, 2003. Under the
euro-rate option, the Company borrows money based on the London Interbank
Offered Rate plus 550-600 basis points. Under the base rate option, the Company
borrows money based on the prime interest rate plus 4.5% to 5.5%. In addition,
payment-in-kind interest at a rate of 200 to 500 basis points per annum is due
and payable in cash on the maturity date of the term loans. The payment-in-kind
margin is determined based on the ratio of debt to cash flows from operations
during the period. The credit facility requires the Company to meet certain
financial covenants and ratios including maximum leverage, minimum interest
coverage, minimum tangible net worth, fixed charge coverage, and rental
merchandise usage ratios. In addition, in the event that the leverage ratio as
measured at June 30, 2003, for the four fiscal quarters then ended, is equal to
or greater than 2.25 to 1.00, the Company will issue warrants to the lenders for
the purchase of the Company's common stock. The shares of common stock which
will be obtained by the lenders upon the exercise of the warrants shall equal
15% of the total outstanding voting power of all the outstanding shares of the
Company immediately prior to the exercise of the warrants.

     On June 24, 2002, the Company amended its credit facility to modify the
maximum leverage ratio, the minimum interest coverage ratio and the fixed charge
coverage ratio covenants.

     On December 13, 2002, the Company amended its credit facility to modify the
maximum leverage ratio, the minimum interest coverage ratio, the minimum
consolidated net worth and the fixed charge coverage ratio covenants for periods
after September 30, 2002. In consideration for the amendment to the credit
facility, the Company will pay 17.5 basis points to approving lenders as an
amendment fee. The amendment fee shall be payable the earlier of the receipt of
proceeds from material asset sales or December 31, 2003. In the event the
Company fails to comply with its covenants in the credit facility, it would be
unable to borrow under the facility. The Company expects to comply with
covenants based on its 2003 projections.


     The financial covenants required under the provisions of the amended senior
credit facility include the following:

               The leverage ratio is debt, including capital lease and letter of
               credit obligations, but not including payment-in-kind interest,
               plus three times occupancy expense for the four quarters then
               ended over the sum of cash flow from operations and occupancy
               expense for the four quarters then ended.

          The interest coverage ratio is the consolidated cash flow from
          operations (net income, amortization, interest expense and income tax
          expense less non-cash credits to income) over interest expense all for
          the four quarters then ended.

          The consolidated net worth shall not be less than $165 million plus
          75% of net income with no deduction for losses, 90% of net proceeds
          from additional equity and 90% of any incremental additive equity
          associated with any acquisition.

          The fixed charge coverage ratio is consolidated cash flow from
          operations minus capital expenditures (excluding rental merchandise)
          to fixed charges (cash interest expense, income taxes and the current
          portion of long-term debt including capital leases).

          The Company must maintain interest rate protection agreements in an
          amount of at least $180 million through December 30, 2002, $160
          million during the period December 31, 2002 through May 30, 2003 and
          $100 million after May 31, 2003.

          The Company shall not make any individual payments exceeding $1
          million or $20 million in the aggregate for a fiscal year to purchase
          fixed assets including capital and operating leases (excluding leases
          of vehicles or store sites).



                                      -11-
<PAGE>

                  The Company cannot allow the book value of rental merchandise
                  under lease to be less than 77% of the total value of rental
                  merchandise held for rent at the end of each fiscal quarter.
                  The value of jewelry cannot exceed 7.5% of the total value of
                  rental merchandise.


     On April 18, 2002, the Company sold 1 million restricted common shares and
warrants (valued according to the Black Scholes valuation method) to acquire
100,000 common shares to Calm Waters Partnership and two other investors (the
"Investors") for $6,000. The warrants have an exercise price of $9.35 per share,
subject to adjustment. In addition, the agreement calls for the Investors to
purchase an additional 2,640,000 common shares for $16,500 and to receive a
warrant to purchase 250,000 shares of common stock at an exercise price equal to
the greater of 105% of the last reported sale price of common stock on the day
preceding the second closing date or $1.50. The Investors' obligation to
purchase the additional shares is subject to certain conditions including that a
replacement of the Company's existing credit facility occur on or prior to
December 31, 2002, conditions related to the Company's existing class action
litigation and ongoing investigations, quarterly aggregate EBITDA, among others.
The Company has also agreed to issue a warrant to purchase 333,000 shares of
common stock to the Investors if the Company fails to achieve aggregate EBITDA
of $80 million or more for the 12-month period commencing on April 1, 2002. The
warrant exercise price per share is based upon the Company's EBITDA for such
period.

     The Company also incurred substantial accounting and legal fees in fiscal
2001 in connection with the process of reviewing its financial reporting
matters, the investigations of the accounting improprieties and the preparation
of its audited financial statement for fiscal 2000. The Company incurred $7.9
million of these expenses in fiscal 2001. In fiscal 2002 there was a $1.9
million reimbursement of accounting and legal fees as a result of an insurance
recovery. This recovery offset fiscal 2002 expense of $1.3 million, resulting in
income of $0.6 million. The Company anticipates incurring additional legal and
other expenses in connection with the class action litigation and governmental
investigations which are ongoing.

    The following table presents obligations and commitments to make future
payments under contracts and contingent commitments at September 30, 2002.
<TABLE>
<CAPTION>
              Contractual Cash                           Due in less        Due in       Due in      Due after
              Obligation*                   Total       than one year     1-3 years     4-5 years     5 years
              ----------                    -----       -------------     ---------     ---------     -------
<S>                                     <C>              <C>            <C>           <C>          <C>
              Long-term debt (1)          $277,121          $31,817        $245,304            --          --
              Capital lease
              obligations                   18,080            9,311           8,733            36          --
              Operating leases             125,384           32,908          65,883        16,809       9,784
              Notes Payable                     86               16              68             2          --
                                         ---------          -------        --------       -------      ------
              Total cash obligations      $420,671          $74,052        $319,988       $16,847      $9,784
                                         =========          =======        ========       =======      ======
</TABLE>

    *Excludes the 401(k) restorative payments program as well as contingent
liabilities including shareholder/derivative lawsuits as these items cannot be
estimated.

(1) Consists of Term Notes A, Term Notes B and revolving notes.

                   Amount of Commitment Expiration Per Period
<TABLE>
<CAPTION>
      Other Commercial            Total Amounts            Less than
         Commitments                 Committed              1 year           1-3 years      4-5 years      Over 5 years
         -----------                 ---------              ------           ---------      ---------      ------------
<S>                                  <C>                    <C>              <C>            <C>            <C>
  Lines of credit                        --                     --               --              --               --
  Standby letters of credit          $8,770                 $8,770               --              --               --
  Guarantees                             --                     --               --              --               --
                                     ------                 ------             ------        -------           ------
  Total commercial
  commitments                        $8,770                 $8,770             $  --         $   --            $  --
                                     ======                 ======             ======        =======           ======
</TABLE>


                                      -12-
<PAGE>

                                 RENT-WAY, INC.

                                    PART III

ITEM 15.  Exhibits

<TABLE>
<CAPTION>
           EXHIBIT NO.        DESCRIPTION
           ----------         --------------------------------------------------------------------------------------
<S>                           <C>
             2.2(2)           Agreement and Plan of Merger among the Company, McKenzie Leasing
                              Corporation, Steve A. McKenzie, Brenda G. McKenzie and others, dated June 9, 1995.

             2.3(4)           Stock Purchase Agreement by and among the Company, Diamond Leasing
                              Corporation, Kenneth H. Moye and Lee Brady, dated July 20, 1996.

             2.4(6)           Stock Purchase Agreement by and among the Company, Bill Coleman TV, Inc. and
                              David Coleman, dated January 2, 1997.

             2.5(5)           Stock Purchase Agreement by and among the Company, Perry Electronics, Inc.,
                              Robert L. Thomas, Norma J. Thomas, Randall D. Snyder and Niki L. Snyder,
                              dated January 24, 1997.

             2.6(5)           Closing Letter Agreement dated February 6, 1997 amending Stock Purchase
                              Agreement by and among the Company, Perry Electronics, Inc., Robert L.
                              Thomas, Norma J. Thomas, Randall D. Snyder and Niki L. Snyder.

             2.7(7)           Asset Purchase Agreement by and among the Company, South Carolina Rentals,
                              Inc., Paradise Valley Holdings, Inc., L & B Rents, Inc. and James S.
                              Archer, dated November 21, 1997.

             2.8(8)           Stock Purchase Agreement by and among the Company, Champion Rentals, Inc.,
                              Bill C. Ogle, Sr. and others, dated as of January 30, 1998.

             2.9(9)           Agreement and Plan of Merger dated September 1, 1998 between the Company and Home Choice
                              Holdings, Inc.

             2.10(11)         Stock Purchase Agreement between the Company, RentaVision, Inc. and Robert
                              Natoli dated September 15, 1999.

             2.11(18)         Asset Purchase Agreement between the Company, Rent-way of Michigan, Inc., and Rent-Way of TTIG,
                              L.P., and Rent-A-Center, Inc., dated December 17, 2002.

             3.1(10)          Articles of Incorporation of the Company, as amended.

             3.2(14)          By-Laws of the Company, as amended.

            10.1(1)           Company's Stock Option Plan of 1992.

            10.2(3)           Company's 1995 Stock Option Plan.

            10.3(1)           Form of Non-Plan Stock Option Agreement.

            10.4(13)          Company's 1999 Stock Option Plan.

            10.5(15)          Employment Agreement between William E. Morgenstern and the Company, dated
                              October 1, 2001.

            10.6(12)          Engagement Agreement between Gerald A. Ryan and the Company, dated October 1, 1999.

            10.9(3)           Consulting Agreement between the Company and McKenzie Development Corporation, dated July 21, 1995.
</TABLE>




                                      -13-
<PAGE>

<TABLE>
<S>                           <C>
            10.10(3)          Non-Competition Agreement between the Company and Steve A. McKenzie, dated July 21, 1995.

            10.11(3)          Non-Competition Agreement between the Company and Brenda G. McKenzie, dated July 21, 1995.

            10.15(9)          Non Competition Agreement between the Company and George D. Johnson, Jr.
                              dated September 1, 1998.

            10.16(13)         Credit Agreement dated September 23, 1999 by and among the Company, the lenders party
                              thereto and National City Bank of Pennsylvania, as administrative agent, Bank of America,
                              as documentation agent and Bank of Montreal and Harris Bank, as syndication agents
                              ("Credit Agreement"), as amended by Amendment No. 1 dated November 19, 1999.

            10.19(10)         Non-Compete Agreement between the Company, South Carolina Rentals, Inc.
                              Paradise Valley Holdings, Inc., L & B Rents, Inc. and James S. Archer,
                              dated January 7, 1998.

            10.22(14)         Amendment No. 2 to Credit Agreement dated as of December 6, 1999.

            10.23(14)         Amendment No. 3 to Credit Agreement dated as of December 7, 1999.

            10.24(14)         Amendment No. 4 to Credit Agreement dated as of June 28,2000.

            10.25(14)         Amendment No. 5 to Credit Agreement dated November 16, 2000.

            10.26(15)         Amendment No. 6 to Credit Agreement dated October 5, 2001.

            10.27(14)         Purchasing Agreement between Gateway Companies, Inc. and the Company dated
                              April 28, 2000

            10.28(14)         Common Stock Purchase Agreement made as of May 1, 2000, between Gateway
                              Companies, Inc. and the Company

            10.29(14)         Employment Agreement between William McDonnell and the Company dated
                              February 1, 2000

            10.30(14)         Separation Agreement between Jeffrey A. Conway and the Company dated as of
                              December 28, 2000.

            10.31(16)         Amendment No. 7 to Credit Agreement dated June 24, 2002.

            10.32(17)         Common Stock and Warrant Purchase Agreement among Rent-Way and Calm Waters Partnership, Walter H.
                              Morris and Charles A. Paquelet  (with form of Warrant attached).

            10.33(17)         Registration Rights Agreement between Rent-Way and Calm Waters  Partnership, Walter H. Morris and
                              Charles A. Paquelet.

            10.34(19)         Amendment No. 8 to Credit Agreement dated December 13, 2002.

            21(15)            Subsidiaries of the Company

            23(20)            Consent of PricewaterhouseCoopers LLP.

            99.1 *            Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
</TABLE>


----------
* Filed herewith


                                                          -14-
<PAGE>

(1)  Previously filed, as of December 8, 1992, as an exhibit to the Company's
     Registration Statement on Form S-18 (No. 33-55562-NY).

(2)  Previously filed, as of August 15, 1995, as an exhibit to the Company's
     Current Report on Form 8-K.

(3)  Previously filed, as of January 5, 1996, pursuant to the Company's
     Registration Statement on Form SB-2 (No. 333-116).

(4)  Previously filed, as of August 8, 1996, as an exhibit to the Company's
     Current Report on Form 8-K.

(5)  Previously filed, as of February 21, 1997, as an exhibit to the Company's
     Current Report on Form 8-K.

(6)  Previously filed, as of November 6, 1997, as an exhibit to the Company's
     Annual Report on Form 10-K.

(7)  Previously filed, as of January 20, 1998, as an exhibit to the Company's
     Current Report on Form 8-K.

(8)  Previously filed, as of February 19, 1998, as an exhibit to the Company's
     Current Report on Form 8-K.

(9)  Previously filed, as of November 6, 1998, pursuant to the Company's
     Registration Statement on Form S-4 (No. 333-66955).

(10) Previously filed, as of December 29, 1998, as an exhibit to the Company's
     Annual Report on Form 10-K.

(11) Previously filed, as of October 12, 1999, as an exhibit to the Company's
     Current Report on Form 8-K.

(12) Previously filed, as of December 22,1999, as an exhibit to the Company's
     Annual Report on Form 10-K.

(13) Previously filed, as of February 12, 1999, as Exhibit A to the Company's
     Proxy Statement on Schedule 14A

(14) Previously filed as of July 2, 2001, as an exhibit to the Company's Annual
     Report on Form 10-K.

(15) Previously filed as of December 28, 2001, as an exhibit to the Company's
     Annual Report on Form 10-K.

(16) Previously filed, as of August 9, 2002, as an exhibit to the Company's
     Quarterly Report on Form 10-Q.

(17) Previously filed as of May 14, 2002, as an exhibit to the Company's
     Quarterly Report on Form 10-Q.


(18) Previously filed as of December 30, 2002, as exhibit 2.11 to the Company's
     Annual Report on Form 10-K.

(19) Previously filed as of December 30, 2002, as exhibit 10.34 to the Company's
     Annual Report on Form 10-K.

(20) Previously filed as of December 30, 2002, as exhibit 23 to the Company's
     Annual Report on Form 10-K.




                                      -15-
<PAGE>

                                 RENT-WAY, INC.

                                   SIGNATURES

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

Registrant: RENT-WAY, INC.

<TABLE>
<S>                                                             <C>
     By:     /s/ William E. Morgenstern                         By:      /s/ William A. McDonnell
             -----------------------------------------                   ------------------------------------------
             William E. Morgenstern                                      William A. McDonnell
             Chairman of the Board and                                   Vice President and Chief Financial Officer
             Chief Executive Officer                                     (Principal Financial Officer)
             (Principal Executive Officer)

     Date:   March 31, 2003                                     Date:    March 31, 2003



     By:     /s/ John A. Lombardi
             -----------------------------------------
             John A. Lombardi
             Vice President, Corporate Controller and
             Chief Accounting Officer
             (Principal Accounting Officer)

     Date:   March 31, 2003
</TABLE>




                                      -16-
<PAGE>



                                  CERTIFICATION

I, William E. Morgenstern, certify that:

1.   I have reviewed this amendment to the annual report on Form 10-K of
     Rent-Way, Inc.;

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report.

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchanged Act Rules 13a-14 and 15d-14) for the registrant and have:

     a.   designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this annual report
          is being prepared;

     b.   evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c.   presented in this annual report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent functions):

     a.   all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

     b.   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

6.   The registrant's other certifying officer and I have indicated in this
     annual report whether there were significant changes in internal controls
     or in other factors that could significantly affect internal controls
     subsequent to the date of our most recent evaluation, including any
     corrective actions with regard to significant deficiencies and material
     weaknesses.

Date:  March 31, 2003

                               /s/ William E. Morgenstern
                               --------------------------
                               William E. Morgenstern
                               Chairman of the Board and Chief Executive Officer



                                      -17-
<PAGE>


                                  CERTIFICATION

I, William A. McDonnell, certify that:

1.   I have reviewed this amendment to the annual report on Form 10-K of
     Rent-Way, Inc.;

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report.

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchanged Act Rules 13a-14 and 15d-14) for the registrant and have:

     a.   designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this annual report
          is being prepared;

     b.   evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and

     c.   presented in this annual report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent functions):

     a.   all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

     b.

     c.   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

6.   The registrant's other certifying officer and I have indicated in this
     annual report whether there were significant changes in internal controls
     or in other factors that could significantly affect internal controls
     subsequent to the date of our most recent evaluation, including any
     corrective actions with regard to significant deficiencies and material
     weaknesses.

Date:  March 31, 2003

                                     /s/ William A. McDonnell
                                     --------------------------------
                                     William A. McDonnell
                                     Vice President and Chief Financial Officer




                                      -18-
<PAGE>
                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
           EXHIBIT NO.        DESCRIPTION
           -----------        -----------------------------------------------------------------------------------------
<S>                           <C>
              2.2(2)          Agreement and Plan of Merger among the Company, McKenzie Leasing
                              Corporation, Steve A. McKenzie, Brenda G. McKenzie and others, dated June 9, 1995.

              2.3(4)          Stock Purchase Agreement by and among the Company, Diamond Leasing
                              Corporation, Kenneth H. Moye and Lee Brady, dated July 20, 1996.

              2.4(6)          Stock Purchase Agreement by and among the Company, Bill Coleman TV, Inc. and
                              David Coleman, dated January 2, 1997.

              2.5(5)          Stock Purchase Agreement by and among the Company, Perry Electronics, Inc.,
                              Robert L. Thomas, Norma J. Thomas, Randall D. Snyder and Niki L. Snyder,
                              dated January 24, 1997.

              2.6(5)          Closing Letter Agreement dated February 6, 1997 amending Stock Purchase
                              Agreement by and among the Company, Perry Electronics, Inc., Robert L.
                              Thomas, Norma J. Thomas, Randall D. Snyder and Niki L. Snyder.

              2.7(7)          Asset Purchase Agreement by and among the Company, South Carolina Rentals,
                              Inc., Paradise Valley Holdings, Inc., L & B Rents, Inc. and James S.
                              Archer, dated November 21, 1997.

              2.8(8)          Stock Purchase Agreement by and among the Company, Champion Rentals, Inc.,
                              Bill C. Ogle, Sr. and others, dated as of January 30, 1998.

              2.9(9)          Agreement and Plan of Merger dated September 1, 1998 between the Company and Home Choice
                              Holdings, Inc.

              2.10(11)        Stock Purchase Agreement between the Company, RentaVision, Inc. and Robert
                              Natoli dated September 15, 1999.

              2.11(18)        Asset Purchase Agreement between the Company, Rent-way of Michigan, Inc., and Rent-Way of TTIG,
                              L.P., and Rent-A-Center, Inc., dated December 17, 2002.

              3.1(10)         Articles of Incorporation of the Company, as amended.

              3.2(14)         By-Laws of the Company, as amended.

             10.1(1)          Company's Stock Option Plan of 1992.

             10.2(3)          Company's 1995 Stock Option Plan.

             10.3(1)          Form of Non-Plan Stock Option Agreement.

             10.4(13)         Company's 1999 Stock Option Plan.

             10.5(15)         Employment Agreement between William E. Morgenstern and the Company, dated
                              October 1, 2001.

             10.6(12)         Engagement Agreement between Gerald A. Ryan and the Company, dated October 1, 1999.

             10.9(3)          Consulting Agreement between the Company and McKenzie Development Corporation, dated July 21, 1995.
</TABLE>


                                      -19-
<PAGE>

<TABLE>
<S>                           <C>
             10.10(3)         Non-Competition Agreement between the Company and Steve A. McKenzie, dated July 21, 1995.

             10.11(3)         Non-Competition Agreement between the Company and Brenda G. McKenzie, dated July 21, 1995.

             10.15(9)         Non Competition Agreement between the Company and George D. Johnson, Jr.
                              dated September 1, 1998.

             10.16(13)        Credit Agreement dated September 23, 1999 by and among the Company, the lenders party
                              thereto and National City Bank of Pennsylvania, as administrative agent, Bank of
                              America, as documentation agent and Bank of  Montreal and Harris Bank, as syndication
                              agents ("Credit Agreement"), as amended by Amendment No. 1 dated November 19, 1999.

             10.19(10)        Non-Compete Agreement between the Company, South Carolina Rentals, Inc.
                              Paradise Valley Holdings, Inc., L & B Rents, Inc. and James S. Archer,
                              dated January 7, 1998.

             10.22(14)        Amendment No. 2 to Credit Agreement dated as of December 6, 1999.

             10.23(14)        Amendment No. 3 to Credit Agreement dated as of December 7, 1999.

             10.24(14)        Amendment No. 4 to Credit Agreement dated as of June 28,2000.

             10.25(14)        Amendment No. 5 to Credit Agreement dated November 16, 2000.

             10.26(15)        Amendment No. 6 to Credit Agreement dated October 5, 2001.

             10.27(14)        Purchasing Agreement between Gateway Companies, Inc. and the Company dated
                              April 28, 2000

             10.28(14)        Common Stock Purchase Agreement made as of May 1, 2000, between Gateway
                              Companies, Inc. and the Company

             10.29(14)        Employment Agreement between William McDonnell and the Company dated
                              February 1, 2000

             10.30(14)        Separation Agreement between Jeffrey A. Conway and the Company dated as of
                              December 28, 2000.

             10.31(16)        Amendment No. 7 to Credit Agreement dated June 24, 2002.

             10.32(17)        Common Stock and Warrant Purchase Agreement among Rent-Way and Calm Waters Partnership, Walter H.
                              Morris and Charles A. Paquelet  (with form of Warrant attached).

             10.33(17)        Registration Rights Agreement between Rent-Way and Calm Waters  Partnership, Walter H. Morris and
                              Charles A. Paquelet.

             10.34(19)        Amendment No. 8 to Credit Agreement dated December 13, 2002.

              21(15)          Subsidiaries of the Company

              23(20)          Consent of PricewaterhouseCoopers LLP.

              99.1 *          Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
</TABLE>



                                      -20-
<PAGE>
----------

*    Filed herewith

(1)  Previously filed, as of December 8, 1992, as an exhibit to the Company's
     Registration Statement on Form S-18 (No. 33-55562-NY).

(2)  Previously filed, as of August 15, 1995, as an exhibit to the Company's
     Current Report on Form 8-K.

(3)  Previously filed, as of January 5, 1996, pursuant to the Company's
     Registration Statement on Form SB-2 (No. 333-116).

(4)  Previously filed, as of August 8, 1996, as an exhibit to the Company's
     Current Report on Form 8-K.

(5)  Previously filed, as of February 21, 1997, as an exhibit to the Company's
     Current Report on Form 8-K.

(6)  Previously filed, as of November 6, 1997, as an exhibit to the Company's
     Annual Report on Form 10-K.

(7)  Previously filed, as of January 20, 1998, as an exhibit to the Company's
     Current Report on Form 8-K.

(8)  Previously filed, as of February 19, 1998, as an exhibit to the Company's
     Current Report on Form 8-K.

(9)  Previously filed, as of November 6, 1998, pursuant to the Company's
     Registration Statement on Form S-4 (No. 333-66955).

(10) Previously filed, as of December 29, 1998, as an exhibit to the Company's
     Annual Report on Form 10-K.

(11) Previously filed, as of October 12, 1999, as an exhibit to the Company's
     Current Report on Form 8-K.

(12) Previously filed, as of December 22,1999, as an exhibit to the Company's
     Annual Report on Form 10-K.

(13) Previously filed, as of February 12, 1999, as Exhibit A to the Company's
     Proxy Statement on Schedule 14A

(14) Previously filed as of July 2, 2001, as an exhibit to the Company's Annual
     Report on Form 10-K.

(15) Previously filed as of December 28, 2001, as an exhibit to the Company's
     Annual Report on Form 10-K.

(16) Previously filed, as of August 9, 2002, as an exhibit to the Company's
     Quarterly Report on Form 10-Q.

(17) Previously filed as of May 14, 2002, as an exhibit to the Company's
     Quarterly Report on Form 10-Q.


(18) Previously filed as of December 30, 2002, as exhibit 2.11 to the Company's
     Annual Report on Form 10-K.

(19) Previously filed as of December 30, 2002, as exhibit 10.34 to the Company's
     Annual Report on Form 10-K.

(20) Previously filed as of December 30, 2002, as exhibit 23 to the Company's
     Annual Report on Form 10-K.



                                      -21-