As filed with the Securities and Exchange Commission on September 6, 2001



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                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

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


                                AMENDMENT NO. 1


                                      TO

                                   FORM S-3

                            REGISTRATION STATEMENT
                                     UNDER
                          THE SECURITIES ACT OF 1933

                             United Rentals, Inc.
            (Exact Name of Registrant as Specified in Its Charter)


                                                            
                           Delaware                                         06-1522496
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)


                          Five Greenwich Office Park
                         Greenwich, Connecticut 06830
                                (203) 622-3131
   (Address, Including Zip Code, and Telephone Number, Including Area Code,
                 of Registrant's Principal Executive Offices)

                   Michael J. Nolan, Chief Financial Officer
                             United Rentals, Inc.
                          Five Greenwich Office Park
                         Greenwich, Connecticut 06830
                                (203) 622-3131
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
                             of Agent For Service)

          A copy of all communications, including communications sent
                 to the agent for service, should be sent to:


                                                       
     Joseph Ehrenreich, Esq.       Malcolm E. Landau, Esq.   Kris F. Heinzelman, Esq.
Ehrenreich Eilenberg & Krause LLP Weil, Gotshal & Manges LLP Cravath, Swaine & Moore
       11 East 44th Street             767 Fifth Avenue          Worldwide Plaza
       New York, NY 10017             New York, NY 10153        825 Eighth Avenue
         (212) 986-9700                 (212) 310-8000          New York, NY 10019
                                                                  (212) 474-1000


    Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this registration statement.
    If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
[_]
    If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
    If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
    If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
    If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]



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

    The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.


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The information in this preliminary prospectus is not complete and may be
changed. These securities may not be sold until the registration statement
filed with the Securities and Exchange Commission is effective. This
preliminary prospectus is not an offer to sell nor does it seek an offer to buy
these securities in any jurisdiction where the offer or sale is not permitted.



                Subject to Completion. Dated September 6, 2001.


                               9,000,000 Shares

                               [LOGO] United/TM/
                                      Rentals

                                 Common Stock

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

    All of the shares of common stock in the offering are being sold by The
Colburn Music Fund. United Rentals, Inc. will not receive any of the proceeds
from the sale of the shares.


    United Rentals' common stock is traded on the New York Stock Exchange under
the symbol "URI". The last reported sale price of the common stock on August
14, 2001, was $23.45 per share.


    See "Risk Factors" beginning on page 9 to read about factors you should
consider before buying shares of our common stock.

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

    Neither the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is
a criminal offense.

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



                                                        Per Share       Total
                                                        ---------       -----
                                                               
Initial price to public..............................      $            $
Underwriting discount................................      $            $
Proceeds, before expenses, to the selling stockholder      $            $


    To the extent that the underwriters sell more than 9,000,000 shares of
common stock, the underwriters have the option to purchase up to an additional
1,350,000 shares from the selling stockholder at the initial public offering
price less the underwriting discount.

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

    The underwriters expect to deliver the shares against payment in New York,
New York on     , 2001.

Goldman, Sachs & Co.                                 Credit Suisse First Boston

JPMorgan
                  Deutsche Banc Alex. Brown
                                          Legg Mason Wood Walker
                                                                   Incorporated

                         Prospectus dated     , 2001.



            CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS


    Certain statements contained in, or incorporated by reference in, this
prospectus are forward-looking in nature. Such statements can be identified by
the use of forward-looking terminology such as "believe," "expect," "may,"
"will," "should," "seek," "on-track," "plan," "intend" or "anticipate," or the
negative thereof or comparable terminology, or by discussions of strategy. You
are cautioned that our business and operations are subject to a variety of
risks and uncertainties and, consequently, our actual results may materially
differ from those projected by any forward-looking statements. Certain of such
risks and uncertainties are discussed below under the heading "Risk Factors."
We make no commitment to revise or update any forward-looking statements in
order to reflect events or circumstances after the date any such statement is
made.


                      WHERE YOU CAN FIND MORE INFORMATION

    We file reports, proxy statements, and other information with the SEC. Such
reports, proxy statements, and other information can be read and copied at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the Public
Reference Room. The SEC maintains an internet site at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding issuers that file electronically with the SEC, including our company.

                          INCORPORATION BY REFERENCE


    The SEC allows us to "incorporate by reference" the documents that we file
with the SEC. This means that we can disclose important information to you by
referring you to those documents. Any information we incorporate in this manner
is considered part of this prospectus; however, to the extent that there are
any inconsistencies between information presented in this prospectus and
information contained in incorporated documents filed with the SEC before the
date of this prospectus, the information in this prospectus shall be deemed to
supersede the earlier information. Any information we file with the SEC after
the date of this prospectus and until this offering is completed will
automatically update and supersede the information contained in this
prospectus.


    We incorporate by reference the following documents that we have filed with
the SEC and any filings that we will make with the SEC in the future under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
this offering is completed:

    . Annual Report on Form 10-K for the year ended December 31, 2000;


    . The following Quarterly Reports on Form 10-Q: (1) Report for the quarter
      ended March 31, 2001, and (2) Report for the quarter ended June 30, 2001;



    . The following Current Reports on Form 8-K: (1) Report filed on January 2,
      2001, (2) Report filed on March 2, 2001, (3) Report filed on April 16,
      2001, (4) Report filed on May 1, 2001 and (5) Report filed on July 27,
      2001;


    . Definitive Proxy Statement on Schedule 14A filed on April 30, 2001; and

    . Registration Statement on Form 8-A dated November 27, 1997 (filed on
      December 3, 1997), and Registration Statement on Form 8-A dated August 6,
      1998.

    We will provide without charge, upon written or oral request, a copy of any
or all of the documents which are incorporated by reference into this
prospectus. Requests should be directed to: United Rentals, Inc., Attention:
Corporate Secretary, Five Greenwich Office Park, Greenwich, Connecticut 06830,
telephone number: (203) 622-3131.


                                      1



                              PROSPECTUS SUMMARY


    This summary may not include all the information that is important to you.
You should read the entire prospectus and the documents incorporated by
reference before making an investment decision. Unless otherwise indicated, all
data in this prospectus assumes that the underwriters will not exercise the
over-allotment option.


                                United Rentals


    United Rentals is the largest equipment rental company in North America
with more than 740 locations in 47 states, seven Canadian provinces and Mexico.
We offer for rent over 600 different types of equipment to customers that
include construction and industrial companies, manufacturers, utilities,
municipalities, homeowners and others. In 2000, we served more than 1.2 million
customers, completed over 8.4 million rental transactions and generated
revenues and net income of $2.9 billion and $176.4 million, respectively.



    We have the largest fleet of rental equipment in the world, with over
500,000 units having an original purchase price of approximately $3.6 billion.
Our fleet includes:


    . General construction and industrial equipment, such as backhoes,
      skid-steer loaders, forklifts, earth moving equipment, material handling
      equipment, compressors, pumps and generators;

    . Aerial work platforms, such as scissor lifts and boom lifts;


    . General tools and light equipment, such as power washers, water pumps,
      heaters and hand tools;


    . Traffic control equipment, such as barricades, cones, warning lights,
      message boards and pavement marking systems;


    . Trench safety equipment for below ground work, such as trench shields,
      aluminum hydraulic shoring systems, slide rails, crossing plates,
      construction lasers and line testing equipment; and



    . Special event equipment, such as large tents, light towers and power
      units used for sporting, corporate and other events.




    In addition to renting equipment, we sell used rental equipment, act as a
dealer for new equipment and sell related merchandise, parts and service.

    We estimate that the U.S. equipment rental industry has grown from
approximately $6.5 billion in annual rental revenues in 1990 to over $25
billion in 2000, representing a compound annual growth rate of approximately
14.5%. We believe that the principal driver of growth in the equipment rental
industry, in addition to general economic expansion, has been the increasing
recognition by equipment users of the many advantages that equipment rental may
offer compared with ownership. They recognize that by renting they can:

    . avoid the large capital investment required for equipment purchases;

    . access a broad selection of equipment and select the equipment best
      suited for each particular job;

    . reduce storage and maintenance costs; and

    . access the latest technology without investing in new equipment.

                                      2



    While the construction industry has to date been the principal user of
rental equipment, industrial companies, utilities and others are increasingly
using rental equipment for plant maintenance, plant turnarounds and other
functions requiring the periodic use of equipment. The market for rental
equipment is also benefiting from increased government funding for
infrastructure projects, such as funding under the U.S. Transportation Equity
Act for the 21st Century ("TEA-21") and the Aviation Investment and Reform Act
for the 21st Century ("AIR-21"). TEA-21 earmarks $175 billion for highway
construction and $42 billion for transit spending over the 1998-2003 fiscal
period, a 40% increase over the prior six-year period. AIR-21 provides for $40
billion in construction spending over three years to support the FAA's airport
improvement programs.

                            Competitive Advantages

    We believe that we benefit from the following competitive advantages:

    Large and Diverse Rental Fleet. Our rental fleet is the largest and most
comprehensive in the industry, which allows us to:

    . attract customers by providing "one-stop" shopping;

    . serve a diverse customer base and reduce our dependence on any particular
      customer or group of customers; and

    . serve customers that require substantial quantities or wide varieties of
      equipment.

    Significant Purchasing Power. We purchase large amounts of equipment,
merchandise and other items, which enables us to negotiate favorable pricing,
warranty and other terms with our vendors. Our purchasing power is further
increased by our ongoing efforts to consolidate our vendor base. For example,
we reduced the number of our primary equipment suppliers from 111 to 28 in
2000. This reduction allowed us to lower our equipment purchase costs by
approximately $150 million in 2000 and should enable us to save additional
amounts in 2001. We expect to realize additional savings by consolidating our
merchandise suppliers and negotiating more favorable warranty terms with key
vendors.


    Operating Efficiencies. We generally group our branches into clusters of 10
to 30 locations that are in the same geographic area. Our information
technology systems allow each branch to access all available equipment within a
cluster. We believe that our cluster strategy produces significant operating
efficiencies and increases equipment utilization by enabling us to: (1) market
equipment through all branches within a cluster, (2) cross-market equipment
specialties of different branches within each cluster and (3) reduce costs by
consolidating functions that are common to our more than 740 branches, such as
payroll, accounts payable and credit and collection, into 24 credit offices and
three service centers. In the second quarter of 2001, approximately 10.7% of
our total rental revenue was attributable to equipment sharing among branches.


    Information Technology Systems. Our information technology systems
facilitate our ability to make rapid and informed decisions, respond quickly to
changing market conditions, and share equipment among branches. These systems
allow: (1) management to obtain a wide range of operating and financial data,
(2) branch personnel to access and manage branch level data, such as customer
requirements, equipment availability and maintenance histories, and (3)
customers to access their accounts online. These systems promote equipment
sharing among branches by enabling branch personnel to locate needed equipment
within a geographic region, determine its closest location and

                                      3



arrange for its delivery to a customer's work site. We have an in-house team of
approximately 100 information technology specialists that supports our systems
and extends them to new locations.


    Geographic and Customer Diversity. We have more than 740 branches in 47
states, seven Canadian provinces and Mexico and served more than 1.2 million
customers in 2000. Our customers are diverse, ranging from Fortune 500
companies to small companies and homeowners, and in 2000 our top ten customers
accounted for approximately 2% of our revenues. We believe that our geographic
and customer diversity provide us with many advantages including: (1) enabling
us to better serve National Account customers with multiple locations, (2)
helping us achieve favorable resale prices by allowing us to access used
equipment resale markets across the country, (3) reducing our dependence on any
particular customer and (4) reducing the impact that fluctuations in regional
economic conditions have on our overall financial performance.



    National Account Program. Our National Account sales force is dedicated to
establishing and expanding relationships with larger companies, particularly
those with a national or multi-regional presence. We offer our National Account
customers the benefits of a consistent level of service across North America
and a single point of contact for all their equipment needs. Our National
Account team includes 39 professionals serving over 1,500 National Account
customers, including more than 130 new accounts added in the second quarter of
2001. We estimate our revenues from National Account customers will increase to
approximately $400.0 million in 2001 from $245.0 million in 2000.



    Risk Management and Safety Programs. We place great emphasis on risk
reduction and safety and believe that we have one of the most comprehensive
risk management and safety programs in the industry. Our risk management
department is staffed by 41 experienced professionals and is responsible for
implementing our safety programs and procedures, developing our employee and
customer training programs and managing any claims against us.


    Experienced Senior Management. Our senior management team is comprised of
executives with proven track records. Our management team includes Bradley S.
Jacobs, John N. Milne and Michael J. Nolan, who together with others founded
our company in September 1997, and Wayland R. Hicks who joined them shortly
thereafter. Prior to the founding of our company, Mr. Jacobs served as the
Chairman and Chief Executive Officer of United Waste Systems, Inc., which he
founded in 1989, and Messrs. Milne and Nolan served as members of the United
Waste senior management team for periods of seven and six years, respectively.
United Waste was sold in August 1997 and, at the time, was the sixth largest
provider of integrated, non-hazardous solid waste management services in the
United States. Mr. Hicks, prior to joining our company, held senior executive
positions at Xerox Corporation, where he worked for 28 years, including
Executive Vice President, Corporate Operations and Executive Vice President,
Corporate Marketing and Customer Support Operations. Mr. Hicks also served as
Vice Chairman and Chief Executive Officer of Nextel Communications Corp.
(1994-1995).

    Strong and Motivated Branch Management. Each of our branches has a
full-time branch manager who is supervised by one of our 63 district managers
and nine regional vice presidents. We believe that our managers are among the
most knowledgeable and experienced in the industry, and we empower them--within
budgetary guidelines--to make day-to-day decisions concerning staffing,
pricing, equipment purchasing and other branch matters. Management closely
tracks branch, district and regional performance with extensive systems and
controls, including performance benchmarks and detailed monthly operating
reviews. We promote equipment sharing among branches by linking the
compensation of branch managers and other personnel to their branch's financial
performance and return on assets.

                                      4



    Flexible Business Strategy. We generate significant cash from operations
that is available for growth investment or debt reduction. In response to the
slowing economy at the beginning of this year, we decreased the rate at which
we purchase new equipment, open new locations and make acquisitions, thereby
increasing cash available for debt reduction. We expect to accelerate our
growth activities as economic conditions warrant.

                                   Strategy

    We have established the following key business strategies:

    Enhance Industry Leadership Position. We intend to use our extensive fleet,
broad geographic coverage, advanced information technology systems and depth of
experience of our senior and branch management to generate further growth and
increase our market share by:

    . actively managing the composition and size of our fleet to meet customer
      needs and respond to local demand;

    . promoting equipment sharing and cross-marketing of equipment specialties
      among branches in geographic regions;

    . focusing on providing outstanding customer service and support;

    . marketing our services to existing and potential National Account
      customers that can benefit from our ability to provide a broad selection
      of equipment and a consistently high level of service throughout North
      America;

    . marketing our extensive fleet of specialized lines of equipment,
      including (1) aerial work platforms for use in large projects requiring
      significant amounts of equipment for extended periods of time, (2)
      traffic control equipment for use in infrastructure projects and (3)
      trench safety equipment required for use in below ground work in order to
      comply with government worker safety standards; and

    . training our sales force and branch personnel in value-added sales
      techniques to achieve customer satisfaction and maximize the value of
      each transaction.

    Maintain Disciplined Approach to Growth Through New Branches and
Acquisitions. We intend to continue to selectively open new branches and make
acquisitions that will expand our geographic reach, enhance our operating
efficiency and increase our market share. In seeking acquisition candidates, we
generally focus on those that have the potential to be immediately accretive to
earnings.

    Rapidly Adapt to Changing Economic Conditions. We have made significant
investments in new equipment over the past several years and, as a result, have
one of the most modern rental fleets in the industry. The young age of our
fleet gives us the flexibility to respond to an economic downturn by reducing
the rate at which we purchase new equipment and sell used equipment. We
anticipate significantly increasing our free cash flow from operations in 2001
by reducing our equipment expenditures to approximately $400 million, compared
to $962 million in 2000.

                                      5



                                 The Offering



                                                 
  Common stock offered by the selling stockholder.. 9,000,000 shares

  Common stock to be outstanding after the offering 73,251,558 shares(1)

  New York Stock Exchange Symbol................... URI

  Use of Proceeds.................................. United Rentals will not
                                                    receive any proceeds from
                                                    this offering.


--------

(1) We calculated the outstanding shares based on the number of shares
    outstanding as of August 14, 2001. The outstanding shares do not include:
    (i) 12,000,000 shares issuable upon conversion of outstanding preferred
    shares of United Rentals, which provide for a conversion price of $25 per
    share, (ii) 5,000,000 shares issuable upon conversion of outstanding
    preferred shares of United Rentals, which provide for a conversion price of
    $30 per share, (iii) 6,875,580 shares issuable upon conversion of
    outstanding preferred securities of a subsidiary trust of United Rentals,
    which provide for a conversion price of $43.625 per share, (iv) 6,808,581
    shares issuable upon the exercise of outstanding warrants, which provide
    for a weighted average exercise price of $11.83 per share, (v) 16,546,567
    shares issuable upon the exercise of outstanding options, which provide for
    a weighted average exercise price of $20.29 per share, and (vi) 232,586
    shares issuable upon conversion of outstanding debt of United Rentals,
    which provide for a weighted average conversion price of $33.25 per share.



                                      6



                  Summary Consolidated Financial Information

    The tables below present selected financial information for our company.
You should read this information together with (1) the information set forth
under "Capitalization," "Selected Consolidated Financial Information" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and (2) the consolidated financial statements of our company and
the related notes which are included herein.



    Certain of our acquisitions were accounted for as purchases and certain
acquisitions were accounted for as poolings-of-interests, including our
September 1998 merger with U.S. Rentals, Inc. For further information
concerning the accounting for these acquisitions, see (1) note 3 to the audited
consolidated financial statements of our company included herein, and (2) note
2 to the unaudited consolidated financial statements of our company included
herein.

                                      7



                  Summary Consolidated Financial Information




                                                                                Six Months Ended
                                                      Year Ended December 31,       June 30,
                                                     -------------------------- -----------------
                                                       1998     1999     2000     2000     2001
                                                      ------   ------   ------   ------   ------
                                                     (dollars in millions, except per share data)
                                                                           
Income statement data:
Total revenues...................................... $1,220   $2,234   $2,919   $1,309    $1,387
Gross profit........................................    423      825    1,089      478       489
Restructuring charge................................                                          29
Operating income....................................    145      409      548      226       185
Interest expense....................................     64      140      229      106       115
Preferred dividends of a subsidiary trust...........      8       20       20       10        10
Income before provision for income taxes and
  extraordinary item................................     78      242      301      110        53
Extraordinary items, net(1).........................     21                                   11
Net income(2).......................................     13      143      176       65        17
Basic earnings per share before extraordinary item.. $ 0.53   $ 2.00   $ 2.48   $ 0.90    $ 0.40
Diluted earnings per share before extraordinary item $ 0.48   $ 1.53   $ 1.89   $ 0.70    $ 0.31
Basic earnings per share(2)......................... $ 0.20   $ 2.00   $ 2.48   $ 0.90    $ 0.24
Diluted earnings per share(2)....................... $ 0.18   $ 1.53   $ 1.89   $ 0.70    $ 0.18






                                                                As of June 30, 2001
                                                               ---------------------
                                                               (dollars in millions)
                                                            
Balance sheet data:
Cash and cash equivalents.....................................        $   36
Rental equipment, net.........................................         1,851
Goodwill, net(3)..............................................         2,200
Total assets..................................................         5,315
Total debt....................................................         2,760
Company-obligated mandatorily redeemable convertible preferred
  securities of a subsidiary trust............................           300
Stockholders' equity..........................................         1,541



--------

(1) We recorded an extraordinary item (net of income taxes) of $21.3 million in
    1998 and an extraordinary item (net of income taxes) of $11.3 million in
    2001. Such charge in 1998 resulted from the early extinguishment of certain
    debt and primarily reflected prepayment penalties on certain debt of U.S.
    Rentals. Such charge in 2001 resulted from the refinancing of certain debt
    and primarily reflected the write-off of deferred financing fees.


(2) Our earnings during 1998 were impacted by merger-related expenses of $47.2
    million ($33.2 million net of taxes or $0.45 per diluted share), a $4.8
    million ($0.07 per diluted share) charge to recognize deferred tax
    liabilities of a company acquired in a pooling-of-interests transaction and
    an extraordinary item (net of income taxes) of $21.3 million ($0.30 per
    diluted share). Our earnings during 1999 were impacted by $18.2 million
    ($10.8 million net of taxes or $0.12 per diluted share) of expenses related
    to a terminated tender offer. Our earnings during 2001 were impacted by a
    restructuring charge of $28.9 million ($19.2 million net of taxes or $0.20
    per diluted share), a $7.8 million ($5.2 million net of taxes or $0.06 per
    diluted share) charge relating to refinancing costs of a synthetic lease
    and an extraordinary item (net of income taxes) of $11.3 million ($0.13 per
    diluted share).


(3) Goodwill is defined as the excess of cost over the fair value of
    identifiable net assets of businesses acquired and is amortized on a
    straight-line basis over forty years.


                                      8



                                 RISK FACTORS

    In addition to the other information in this document, you should carefully
consider the following factors before making an investment decision.




A decline in construction and industrial activities could adversely affect our
revenues and operating results by decreasing the demand for our equipment or
the prices that we can charge.



    Our equipment is principally used in connection with construction and
industrial activities. Consequently, a downturn in construction or industrial
activity may lead to a decrease in the demand for our equipment or the prices
that we can charge. Any such decrease could adversely affect our revenues and
operating results. We have identified below certain of the factors which may
cause such a downturn, either temporarily or long-term:



    . a continuation or a worsening of the recent slow-down of the economy;


    . an increase in interest rates; or

    . adverse weather conditions which may temporarily affect a particular
      region.

    In addition, demand for our equipment may not reach projected levels in the
event that funding for highway and other construction projects under government
programs, such as the Transportation Equity Act for the 21st Century ("TEA-21")
or the Aviation Investment and Reform Act for the 21st Century ("AIR-21"), does
not reach expected levels.




If we lose any member of our senior management team and are unable to find a
suitable replacement, we may not have the depth of senior management resources
required to efficiently manage our business and execute our growth strategy.



    Our success is highly dependent on the experience and skills of our senior
management team. If we lose the services of any member of this team and are
unable to find a suitable replacement, we may not have the depth of senior
management resources required to efficiently manage our business and execute
our growth strategy. For information on our employment and severance
arrangements with senior management, see "Management--Employment Agreements and
Change-in-Control Agreements." We do not maintain "key man" life insurance with
respect to members of senior management.





Our industry is highly competitive, and competitive pressures could lead to a
decrease in our market share or in the prices that we can charge.



    The equipment rental industry is highly fragmented and competitive. Our
competitors primarily include small, independent businesses with one or two
rental locations, regional competitors which operate in one or more states,
public companies or divisions of public companies, and equipment vendors and
dealers who both sell and rent equipment directly to customers. We may in the
future encounter increased competition from our existing competitors or from
new companies. In addition, equipment manufacturers may commence or increase
their existing efforts relating to renting and selling equipment directly to
our customers or potential customers. Competitive pressures could adversely
affect our revenues and operating results by decreasing our market share or
depressing the prices that we can charge.


Our operating results may fluctuate which could affect the trading value of our
common stock.

    We expect that our revenues and operating results may fluctuate from
quarter to quarter or over the longer term due to a number of factors,
including:

    . seasonal rental patterns of our customers, with rental activity tending
      to be lower in the winter;

    . our recent acquisition of businesses that specialize in renting traffic
      control equipment, which tend to operate at a loss during the first
      quarter;

    . the timing of expenditures for new equipment and the disposition of used
      equipment;

    . changes in demand for our equipment or the prices therefor due to changes
      in economic conditions, competition or other factors;

                                      9



    . changes in the interest rates applicable to our floating rate debt;

    . if we determine that a potential acquisition will not be consummated, the
      need to charge against earnings any expenditures relating to such
      transaction (such as financing commitment fees, merger and acquisition
      advisory fees and professional fees) previously capitalized; and

    . the possible need, from time to time, to take other write-offs or special
      charges due to a variety of occurrences, such as store consolidations or
      closings or the refinancing of existing indebtedness.

Fluctuations in our operating results could adversely affect the trading value
of our common stock.


Our substantial indebtedness will require us to devote a substantial portion of
our cash flow to debt service and could, among other things, constrain our
ability to obtain additional financing and make it more difficult for us to
cope with a downturn in our business.



    We have a substantial amount of indebtedness. Specifically, on June 30,
2001, our total indebtedness was approximately $2,759.7 million, of which
approximately $1,327.7 million was secured indebtedness. Our substantial
indebtedness has the potential to affect us adversely in a number of ways. For
example, it will or could:



    . require us to devote a substantial portion of our cash flow to debt
      service, reducing the funds available for other purposes;



    . constrain our ability to obtain additional financing, particularly since
      substantially all of our assets are subject to security interests
      relating to existing indebtedness; or



    . make it difficult for us to cope with a downturn in our business or a
      decrease in our cash flow.



    Furthermore, if we are unable to service our indebtedness and fund our
business, we will be forced to adopt an alternative strategy that may include:



    . reducing or delaying capital expenditures;



    . limiting our growth;



    . seeking additional capital;



    . selling assets; or



    . restructuring or refinancing our indebtedness.



We cannot assure you that any of these strategies could be effected on
favorable terms or at all.



An increase in market interest rates would increase our interest expense and
our debt service obligations because some of our debt bears interest at
variable rates.



    A portion of our indebtedness bears interest at variable rates that are
linked to changing market interest rates. As a result, an increase in market
interest rates would increase our interest expense and our debt service
obligations. On June 30, 2001, we had $1,295.0 million of variable rate
indebtedness.





If we are unable to obtain additional capital as required, we may be unable to
fund the capital outlays required for the success of our business, including
those relating to purchasing equipment, making acquisitions, opening new rental
locations and refinancing existing indebtedness.



    If the cash that we generate from our business, together with cash that we
may borrow under our credit facility, is not sufficient to fund our capital
requirements, we will require additional debt and/or equity financing. We
cannot, however, be certain that any additional financing will be available or,
if available, will be available on terms that are satisfactory to us. If we are
unable to obtain sufficient additional capital in the future, we may be unable
to fund the capital outlays required for the success of our business, including
those relating to purchasing equipment, making acquisitions, opening new rental
locations and refinancing existing indebtedness.


                                      10




Restrictive covenants could adversely affect our business by limiting our
flexibility.



    We are subject to various restrictive financial and operating covenants
under the agreements governing our indebtedness. These covenants limit or
prohibit, among other things, our ability to incur indebtedness, make
prepayments of certain indebtedness, make investments, create liens, make
acquisitions, sell assets and engage in mergers and acquisitions. These
covenants could adversely affect our business by significantly limiting our
operating and financial flexibility.



We have made acquisitions, which entails certain risks. We cannot guarantee
that we will realize the expected benefits from our acquisitions or that our
existing operations will not be harmed as a result of acquisitions.



    We have grown in part through acquisitions and may continue to do so. The
making of acquisitions entails certain risks, including:


    . unrecorded liabilities of acquired companies that we fail to discover
      during our due diligence investigations;

    . difficulty in assimilating the operations and personnel of the acquired
      company with our existing operations;

    . loss of key employees of the acquired company; and

    . difficulty maintaining uniform standards, controls, procedures and
      policies.


We cannot guarantee that we will realize the expected benefits from our
acquisitions or that our existing operations will not be harmed as a result of
acquisitions.



Goodwill related to acquisitions represents a substantial portion of our total
assets. If the fair value of the goodwill should drop below the recorded value,
we would be required to write off the excess goodwill, which could adversely
affect our operating results.



    At June 30, 2001, we had on our balance sheet net goodwill in the amount of
$2.2 billion, which represents approximately 41.4% of our total assets at such
date. This goodwill is an intangible asset and represents the excess of the
purchase price that we paid for acquired businesses over the estimated fair
market value of the net assets of those businesses. If the fair value of the
goodwill, determined in accordance with applicable accounting standards, were
to fall below the recorded value shown on the balance sheet, we would be
required to write off the excess goodwill. Any write-off would be treated as an
expense and would adversely affect our operating results.



Disruptions in our information technology systems could adversely affect our
operating results by limiting our capacity to effectively monitor and control
our operations.



    Our information technology systems facilitate our ability to monitor and
control our operations and adjust to changing market conditions. Any
disruptions in these systems or the failure of these systems to operate as
expected could, depending on the magnitude of the problem, adversely affect our
operating results by limiting our capacity to effectively monitor and control
our operations and adjust to changing market conditions.


We are exposed to various possible claims relating to our business, and our
insurance may not fully protect us.

    We are exposed to various possible claims relating to our business. These
possible claims include those relating to (1) personal injury or death caused
by equipment rented or sold by us, (2) motor vehicle accidents involving our
delivery and service personnel and (3) employment related claims. We carry a
broad range of insurance for the protection of our assets and operations.
However, such insurance may not fully protect us for a number of reasons,
including:

    . our coverage is subject to a deductible of $1.0 million and limited to a
      maximum of $98.0 million per occurrence;

                                      11



    . we do not maintain coverage for environmental liability (other than
      legally required fuel storage tank coverage), since we believe that the
      cost for such coverage is high relative to the benefit that it provides;
      and

    . certain types of claims, such as claims for punitive damages or for
      damages arising from intentional misconduct, which are often alleged in
      third party lawsuits, might not be covered by our insurance.


If we are found liable for any significant claims that are not covered by
insurance, our operating results could be adversely affected. We cannot be
certain that insurance will continue to be available to us on economically
reasonable terms, if at all.



We are subject to numerous environmental and safety regulations. If we are
required to incur compliance or remediation costs that are not currently
anticipated our operating results could be hurt.


    Our operations are subject to numerous laws governing environmental
protection and occupational health and safety matters. These laws regulate such
issues as wastewater, stormwater, solid and hazardous wastes and materials, and
air quality. Under these laws, we may be liable for, among other things, (1)
the costs of investigating and remediating contamination at our sites as well
as sites to which we sent hazardous wastes for disposal or treatment regardless
of fault and (2) fines and penalties for non-compliance. Our operations
generally do not raise significant environmental risks, but we use hazardous
materials to clean and maintain equipment, and dispose of solid and hazardous
waste and wastewater from equipment washing, and store and dispense petroleum
products from underground and above-ground storage tanks located at certain of
our locations.

    Based on the conditions currently known to us, we do not believe that any
pending or likely remediation and compliance costs will have a material adverse
effect on our business. We cannot be certain, however, as to the potential
financial impact on our business if new adverse environmental conditions are
discovered or environmental and safety requirements become more stringent. If
we are required to incur environmental compliance or remediation costs that are
not currently anticipated by us, our business could be adversely affected
depending on the magnitude of the cost.


Labor disputes could disrupt our ability to serve our customers or lead to
higher labor costs.





    We have approximately 1,207 employees that are represented by unions and
covered by collective bargaining agreements. If we should experience a
prolonged labor dispute involving a significant number of our employees, our
ability to serve our customers could be adversely affected. Furthermore, our
labor costs could increase as a result of the settlement of actual or
threatened labor disputes.





Our operations outside the United States are subject to the risks normally
associated with international operations which could adversely affect our
operating results.



   Our operations outside the United States are subject to the risks normally
associated with international operations. These include (1) the need to convert
currencies, which could result in a gain or loss depending on fluctuations in
exchange rates, (2) the need to comply with foreign laws and (3) the
possibility of political or economic instability in foreign countries.


Absence of dividends could reduce our attractiveness to investors.


    We have never paid any dividends on our common stock and have no plans to
pay any such dividends in the foreseeable future. Furthermore, certain of the
agreements governing our outstanding indebtedness prohibit us from paying
dividends on our common stock or restrict our ability to pay such dividends.
See "Dividend Policy." As a result, our stock may be less attractive to certain
investors than the stock of dividend-paying companies.


                                      12



Shares eligible for future sale could adversely affect the market price of our
common stock.

    If our stockholders sell substantial amounts of our common stock (including
shares issued upon exercise of warrants, options or convertible securities),
the market price of our common stock could fall. Subject to certain lock-up
agreements to be entered into by the selling stockholder and by our officers
and directors in connection with the offering (as described under
"Underwriting"), substantially all of the outstanding shares of our common
stock may be sold in the public market.

Anti-takeover provisions in our charter and by-laws could limit our share price
and deter a third party from acquiring our company.

    Certain provisions of our Certificate of Incorporation and By-laws, as well
as applicable Delaware law, could make it difficult for a third party to
acquire our company without the consent of the incumbent board. These
provisions provide, among other things, that:

    . the directors of our company (other than directors elected by the holders
      of our outstanding preferred stock) are divided into three classes, with
      directors of each class serving for a staggered three-year period;

    . directors may be removed only for cause and only upon the affirmative
      vote of at least 66 2/3% of the voting power of all the then outstanding
      shares of stock entitled to vote;

    . stockholders may not act by written consent;

    . stockholder nominations and proposals may only be made if specified
      advance notice requirements are complied with;

    . stockholders are precluded from calling a special meeting of
      stockholders; and

    . the board of directors has the authority to issue shares of preferred
      stock in one or more series and to fix the powers, preferences and rights
      of any such series without stockholder approval.


    These provisions could:



    . have the effect of delaying, deferring or preventing a change of control
      that may be in the best interests of the stockholders and that the
      stockholders may favor;



    . discourage bids for our common stock at a premium over the market price;
      and



    . impede the ability of the holders of our common stock to change our
      management.


                                USE OF PROCEEDS

    United Rentals will not receive any proceeds from the sale of common stock
in this offering by the selling stockholder.

                                      13



                          PRICE RANGE OF COMMON STOCK

    Our common stock trades on the New York Stock Exchange under the symbol
"URI." The following table sets forth, for the periods indicated, the high and
low sales prices for the common stock, as reported by the New York Stock
Exchange.




                                                        High   Low
                                                       ------ ------
                                                        
           1999:
              First quarter........................... $35.69 $26.13
              Second quarter..........................  33.25  25.13
              Third quarter...........................  31.00  21.50
              Fourth quarter..........................  21.94  14.31

           2000:
              First quarter........................... $22.31 $13.44
              Second quarter..........................  19.94  13.00
              Third quarter...........................  24.19  17.00
              Fourth quarter..........................  24.31  11.69

           2001:
              First quarter........................... $19.73 $12.75
              Second quarter..........................  26.40  15.06
              Third quarter (through August 14, 2001).  26.00  22.10




    On August 14, 2001, the last reported sale price of the common stock as
reported on the New York Stock Exchange was $23.45. As of August 14, 2001,
there were approximately 331 holders of record of the common stock. We believe
that the number of beneficial owners is substantially greater than the number
of record holders, because a large portion of the common stock is held of
record in broker "street name."


                                DIVIDEND POLICY

    We intend to retain all earnings for the foreseeable future for use in the
operation and expansion of our business and, accordingly, we currently have no
plans to pay dividends on our common stock. The payment of any future dividends
will be determined by our board of directors in light of conditions then
existing, including our earnings, financial condition and capital requirements,
restrictions in financing agreements, business conditions and other factors.
Under the terms of certain agreements governing our outstanding indebtedness,
we are prohibited or restricted from paying dividends on our common stock. In
addition, under Delaware law, we are prohibited from paying any dividends
unless we have capital surplus or net profits available for this purpose.

                                      14



                                CAPITALIZATION


    The following table summarizes our capitalization as of June 30, 2001. You
should read this table together with (1) the information set forth under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and (2) the consolidated financial statements of our company and
the related notes which are included herein.







                                                                                As of June 30, 2001
                                                                               ---------------------
                                                                               (dollars in millions,
                                                                                except share data)
                                                                            
Cash and cash equivalents.....................................................        $   36
                                                                                      ======
Debt (including current portion):
   Revolving credit facility..................................................        $  333
   Term loan..................................................................           750
   Receivables securitization.................................................           212
   10 3/4% senior notes due 2008..............................................           450
   9 1/2% senior subordinated notes due 2008..................................           200
   8.8% senior subordinated notes due 2008....................................           201
   9 1/4% senior subordinated notes due 2009..................................           300
   9% senior subordinated notes due 2009......................................           250
   Other debt.................................................................            64
                                                                                      ------
       Total debt.............................................................         2,760
Company-obligated mandatorily redeemable convertible preferred securities of a
  subsidiary trust............................................................           300
Stockholders' equity:
   Preferred stock--$.01 par value, 5,000,000 shares authorized:
       Series A perpetual convertible preferred stock--$300 liquidation
         preference, 300,000 shares issued and outstanding....................
       Series B perpetual convertible preferred stock--$150 liquidation
         preference, 150,000 shares issued and outstanding....................
   Common stock--$.01 par value, 500,000,000 shares authorized,
     73,150,359 shares issued and outstanding(1)..............................             1
   Additional paid in capital.................................................         1,241
   Deferred compensation......................................................           (59)
   Retained earnings..........................................................           373
   Accumulated other comprehensive loss.......................................           (15)
                                                                                      ------
       Total stockholders' equity.............................................         1,541
                                                                                      ------
Total capitalization..........................................................        $4,601
                                                                                      ======


--------



(1) Does not include (i) 12,000,000 shares issuable upon conversion of the
    outstanding shares of Series A Perpetual Convertible Preferred Stock, which
    provide for a conversion price of $25 per share, (ii) 5,000,000 shares
    issuable upon conversion of the outstanding shares of Series B Perpetual
    Convertible Preferred Stock, which provide for a conversion price of $30
    per share, (iii) 6,875,580 shares issuable upon conversion of the
    outstanding preferred securities of a subsidiary trust, which provide for a
    conversion price of $43.625 per share, (iv) 6,808,581 shares issuable upon
    the exercise of outstanding warrants, which provide for a weighted average
    exercise price of $11.83 per share, (v) 16,546,567 shares issuable upon the
    exercise of outstanding options, which provide for a weighted average
    exercise price of $20.29 per share, and (vi) 232,586 shares issuable upon
    conversion of outstanding debt of United Rentals, which provide for a
    weighted average conversion price of $33.25 per share.


                                      15



                  SELECTED CONSOLIDATED FINANCIAL INFORMATION

    The tables below present selected financial information for our company.
You should read this information together with (1) the information set forth
under "Capitalization" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and (2) the consolidated financial
statements of our company and the related notes which are included herein.


    The balance sheet data presented below as of December 31, 2000 and 1999 and
the income statement data for the years ended December 31, 2000, 1999 and 1998
are derived from our audited consolidated financial statements which are
included herein. The balance sheet data presented below as of December 31,
1998, 1997 and 1996 and the income statement data for the years ended December
31, 1997 and 1996 are derived from audited consolidated financial statements of
our company which are not included or incorporated by reference in this
prospectus. The balance sheet data presented below as of June 30, 2001 and the
income statement data for the six-month periods ended June 30, 2001 and 2000
are derived from our unaudited consolidated financial statements which are
included herein.




    Certain of our acquisitions were accounted for as purchases and certain
acquisitions were accounted for as poolings-of-interests, including our
September 1998 merger with U.S. Rentals, Inc. For further information
concerning the accounting for these acquisitions, see (1) note 3 to the audited
consolidated financial statements of our company included herein and (2) note 2
to the unaudited consolidated financial statements of our company included
herein.

                                      16



                  Selected Consolidated Financial Information




                                                                                                Six Months
                                                                                                   Ended
                                                                 Year Ended December 31,         June 30,
                                                           ----------------------------------  -------------
                                                           1996  1997    1998    1999   2000    2000   2001
                                                           ----- -----  ------  ------ ------  ------ ------
                                                             (dollars in millions, except per share data)
                                                                                 
Income statement data:
Total revenues............................................ $ 354 $ 490  $1,220  $2,234 $2,919  $1,309 $1,387
Total cost of operations..................................   241   341     797   1,409  1,830     831    898
                                                           ----- -----  ------  ------ ------  ------ ------
Gross profit..............................................   113   149     423     825  1,089     478    489
Selling, general and administrative expenses..............    55    71     196     353    454     211    222
Merger-related expenses...................................                  47
Restructuring charge......................................                                                29
Non-rental depreciation and amortization..................     9    13      35      63     87      41     53
Termination cost of deferred compensation agreements......          20
                                                           ----- -----  ------  ------ ------  ------ ------
Operating income..........................................    49    45     145     409    548     226    185
Interest expense..........................................    11    12      64     140    229     106    115
Preferred dividends of a subsidiary trust.................                   8      20     20      10     10
Other (income) expense, net...............................          (2)     (5)      7     (2)             7
                                                           ----- -----  ------  ------ ------  ------ ------
Income before provision for income taxes and extraordinary
 items....................................................    38    35      78     242    301     110     53
Provision for income taxes................................          30      44      99    125      45     25
                                                           ----- -----  ------  ------ ------  ------ ------
Income before extraordinary items.........................    38     5      34     143    176      65     28
Extraordinary items, net(1)...............................           1      21                            11
                                                           ----- -----  ------  ------ ------  ------ ------
Net income(2)............................................. $  38 $   4  $   13  $  143 $  176  $   65 $   17
                                                           ===== =====  ======  ====== ======  ====== ======
Pro forma provision for income taxes before extraordinary
 items(3)................................................. $  15 $  14  $   44
Pro forma income before extraordinary items(2)............    23    21      34
Basic earnings per share before extraordinary items....... $1.67 $0.12  $ 0.53  $ 2.00 $ 2.48  $ 0.90 $ 0.40
Diluted earnings per share before extraordinary items..... $1.67 $0.11  $ 0.48  $ 1.53 $ 1.89  $ 0.70 $ 0.31
Basic earnings per share(2)............................... $1.67 $0.08  $ 0.20  $ 2.00 $ 2.48  $ 0.90 $ 0.24
Diluted earnings per share(2)............................. $1.67 $0.08  $ 0.18  $ 1.53 $ 1.89  $ 0.70 $ 0.18






                                                           As of December 31,
                                                     ------------------------------     As of
                                                     1996 1997  1998   1999   2000  June 30, 2001
                                                     ---- ---- ------ ------ ------ -------------
                                                                (dollars in millions)
                                                                  
Balance sheet data:
Cash and cash equivalents........................... $  3 $ 72 $   20 $   24 $   34    $   36
Rental equipment, net...............................  235  461  1,143  1,660  1,733     1,851
Goodwill, net(4)....................................    1   74    922  1,853  2,216     2,200
Total assets........................................  381  826  2,635  4,498  5,124     5,315
Total debt..........................................  214  265  1,315  2,266  2,675     2,760
Company-obligated mandatorily redeemable convertible
 preferred securities of a subsidiary trust.........              300    300    300       300
Stockholders' equity................................  105  446    726  1,397  1,546     1,541


--------

(1)The charge in 1997 resulted from the prepayment of debt by U.S. Rentals. The
   charge in 1998 resulted from the early extinguishment of certain debt and
   primarily reflected prepayment penalties on certain debt of U.S. Rentals.
   The charge in 2001 resulted from the refinancing of certain debt and
   primarily reflected the write-off of deferred financing fees.


(2)Our earnings during 1997 were impacted by $20.3 million ($0.40 per diluted
   share) of expenses related to the termination of certain deferred
   compensation expenses in connection with U.S. Rentals' initial public
   offering, a $7.5 million ($0.15 per diluted share) charge to recognize
   deferred tax liabilities of U.S. Rentals and an extraordinary item (net of
   income taxes) of $1.5 million ($0.03 per diluted share). Our earnings during
   1998 were impacted by merger-related expenses of $47.2 million ($33.2
   million net of taxes or $0.45 per diluted share), a $4.8 million ($0.07 per
   diluted share) charge to recognize deferred tax liabilities of a company
   acquired in a pooling-of-interests transaction and an extraordinary item
   (net of income taxes) of $21.3 million ($0.30 per diluted share). Our
   earnings during 1999 were impacted by $18.2 million ($10.8 million net of
   taxes or $0.12 per diluted share) of expenses related to a terminated tender
   offer. Our earnings during 2001 were impacted by a restructuring charge of
   $28.9 million ($19.2 million net of taxes or $0.20 per diluted share), a
   $7.8 million ($5.2 million net of taxes or $0.06 per diluted share) charge,
   recorded in other expense, relating to refinancing costs of a synthetic
   lease, and an extraordinary item (net of income taxes) of $11.3 million
   ($0.13 per diluted share).


                                      17






(3)U.S. Rentals was taxed as a Subchapter S Corporation until its initial
   public offering in February 1997, and another company that we acquired in a
   pooling-of-interests transaction was taxed as a Subchapter S Corporation
   until being acquired by us in 1998. In general, the income or loss of a
   Subchapter S Corporation is passed through to its owners rather than being
   subjected to taxes at the entity level. Pro forma provisions for income
   taxes before extraordinary items and pro forma income before extraordinary
   items reflect a provision for income taxes as if all such companies were
   liable for federal and state income taxes as taxable corporate entities for
   all periods presented.


(4)Goodwill is defined as the excess of cost over the fair value of
   identifiable net assets of businesses acquired and is amortized on a
   straight-line basis over forty years.


                                      18



MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                                  OPERATIONS

    The following discussion should be read in conjunction with the
consolidated financial statements of our company and the related notes which
are included herein.

General

    We primarily derive revenues from the following sources: (i) equipment
rental (including additional fees that may be charged for equipment delivery,
fuel, repair of rental equipment, and damage waivers), (ii) the sale of used
rental equipment, (iii) the sale of new equipment and (iv) the sale of related
merchandise and parts and other revenue.

    Cost of operations consists primarily of depreciation costs associated with
rental equipment, the cost of repairing and maintaining rental equipment, the
cost of rental equipment and equipment and other merchandise sold, personnel
costs, occupancy costs and supplies.

    We record rental equipment expenditures at cost and depreciate equipment
using the straight-line method over the estimated useful life (which ranges
from 2 to 10 years), after giving effect to an estimated salvage value of 0% to
10% of cost.

    Selling, general and administrative expenses primarily include sales
commissions, advertising and marketing expenses, management salaries, and
clerical and administrative overhead.

    Non-rental depreciation and amortization includes (i) depreciation expense
associated with equipment that is not offered for rent (such as vehicles,
computers and office equipment) and amortization expense associated with
leasehold improvements, (ii) the amortization of deferred financing costs and
(iii) the amortization of intangible assets. Our intangible assets include
non-compete agreements and goodwill, which represents the excess of the
purchase price of acquired companies over the estimated fair market value of
the net assets acquired.

Accounting For Acquisitions

    We commenced operations in October 1997 and have completed 247
acquisitions, including a merger with U.S. Rentals, Inc., which was completed
in September 1998. We accounted for three of these acquisitions (including the
U.S. Rentals merger) as "poolings-of-interests," which means that for
accounting and financial reporting purposes the acquired company is treated as
having been combined with us at all time since the inception of the acquired
company. Accordingly, we have restated our financial statements to include the
accounts of two of the companies acquired in these pooling-of-interest
transactions (but have not restated our financial statements for the third
transaction, which was not material and which has been combined with us
effective July 1, 1998). For additional information concerning this
restatement, see note 3 to our audited consolidated financial statements
included herein. We accounted for our other acquisitions as "purchases," which
means that the results of operations of the acquired company are included in
our financial statements only from the date of acquisition. In view of the fact
that our operating results for 2001, 2000, 1999 and 1998 were affected by
acquisitions that were accounted for as purchases, we believe that our results
for these periods are not directly comparable.


Restructuring Plan



    We have adopted a restructuring plan involving the following principal
elements: (i) 31 underperforming branches are being closed or consolidated with
other locations (comprised of 18


                                      19




closed or consolidated as of June 30, 2001 and 13 that will be closed or
consolidated by December 31, 2001); (ii) five administrative offices are being
closed or consolidated with other locations; (iii) our employee headcount is
being reduced by 489; and (iv) certain information technology hardware and
software will no longer be used.



    The aggregate annual revenues from the 31 branches that are being
eliminated amounted to approximately $82.0 million. We expect that we will
retain approximately $56 million of this revenue by shifting the business of
some of the closed branches to other locations. We estimate that we will
realize annual cost savings from the branch closures of approximately $33
million.



    We recorded, in the second quarter of 2001, a restructuring charge of
approximately $28.9 million relating to the restructuring plan described above.
This charge is comprised of a non-cash charge in the amount of $10.9 million
and cash expenses in the amount of $18.0 million. We paid approximately $3.2
million of these cash expenses in the second quarter of 2001. We expect to pay
the balance of these cash expenses as follows: approximately $8.6 million
during the balance of 2001 and approximately $6.2 million in subsequent
periods.



    The restructuring charge includes: (1) the cost of vacating facilities,
primarily the payment of obligations under leases, offset by estimated sublease
opportunities, the write-off of capital improvements made to such facilities
and the write-off of related goodwill, (2) workforce reduction costs, primarily
severance, and (3) information technology costs. The table below provides
certain information concerning the restructuring charge:





                                                        Activity
                                                Amount  through  Balance
                                                  of    June 30, June 30,
          Components of Restructuring Charge    Charge  2001(1)  2001(2)
          ----------------------------------    ------- -------- --------
                                                        
           Cost to vacate facilities........... $18,291 $ 9,779  $ 8,512
           Workforce reduction costs...........   5,666   1,296    4,370
          Information technology costs.........   4,965   3,042    1,923

                                                ------- -------  -------
               Total........................... $28,922 $14,117  $14,805
                                                ======= =======  =======


--------

    (1)Represents the non-cash component of the charge plus the cash component
       that was paid through June 30, 2001.


    (2)Represents the portion of the cash component of the charge that had not
       been paid as of June 30, 2001.



Debt Refinancing and Extraordinary Item



    We refinanced an aggregate of $1,695.7 million of indebtedness and other
obligations in April 2001, as described under "--Liquidity and Capital
Resources--Information Concerning Recent Financing Transactions." We recorded
the following charges relating to this refinancing in the second quarter of
2001: (i) a pre-tax extraordinary charge of $18.1 million ($11.3 million, net
of tax) that relates to the refinancing of indebtedness and primarily reflects
the write-off of deferred financing fees and (ii) a pre-tax charge of $7.8
million ($5.2 million, net of tax) that is recorded in other (income) expense,
net, and relates to the refinancing of a synthetic lease.


                                      20



Results of Operations




  Six Months Ended June 30, 2001 and 2000



    Revenues. Total revenues for the six months ended June 30, 2001 were
$1,387.1 million, representing an increase of 6.0% over total revenues of
$1,308.9 million for the six months ended June 30, 2000. Our revenues during
these periods were attributable to the following sources:



    .  Revenues from Equipment Rentals. These revenues were $1,043.8 million in
       the first six months of 2001, representing an increase of 14.5% from
       $911.6 million in the first six months of 2000. These revenues accounted
       for 75.3% of our total revenues in the first six months of 2001 compared
       with 69.6% of our total revenues in first six months of 2000. The 14.5%
       increase in these revenues in the first six months of 2001 reflected (i)
       increased revenues at locations open more than one year (which accounted
       for approximately 8.0 percentage points, 7.9 percentage points of which
       related to increases in the volume of transactions and utilization
       rates, offset by 0.1 percentage points from price decreases) and (ii)
       new rental locations acquired through acquisitions and the opening of
       start-up locations, partially offset by locations sold or closed (which
       accounted for approximately 6.5 percentage points).




    .  Revenues from the Sales of Rental Equipment. These revenues were $72.2
       million in the first six months of 2001, representing a decrease of
       53.4% from $155.2 million in the first six months of 2000. These
       revenues accounted for 5.2% of our total revenues in the first six
       months of 2001 compared with 11.9% of our total revenues in the first
       six months of 2000. The reduction in these revenues in 2001 reflects the
       fact that, as the economy softened, we reduced our budget for new
       equipment purchases in 2001 and slowed the rate at which we sell our
       used rental equipment. See "--Liquidity and Capital Resources--Certain
       Measures to Reduce Cash Requirements."





    .  Revenues from the Sales of Equipment and Merchandise and Other Revenues.
       These revenues were $271.1 million in the first six months of 2001,
       representing an increase of 12.0% from $242.1 million in the first six
       months of 2000. These revenues accounted for 19.6% of our total revenues
       in the first six months of 2001 compared with 18.5% of our total
       revenues in the first six months of 2000. The 12.0% increase in sales of
       equipment and merchandise and other revenues was attributable to the
       increase in the volume of transactions.



    Gross Profit. Gross profit increased to $488.6 million in the six months
ended June 30, 2001, from $477.8 million in the six months ended June 30, 2000.
This increase primarily reflected the increase in revenues described above. Our
gross profit margin by source of revenues in the six months ended June 30, 2001
and 2000 was: (i) equipment rental (36.9% in the six months ended June 30, 2001
and 39.0% in the six months ended June 30, 2000), (ii) sales of rental
equipment (41.3% in the six months ended June 30, 2001 and 41.2% in the six
months ended June 30, 2000) and (iii) sales of equipment and merchandise and
other revenues (27.1% in the six months ended June 30, 2001 and 23.9% in the
six months ended June 30, 2000).



    The decrease in the gross profit margin from rental revenues in the six
months ended June 30, 2001, principally reflected the following factors. First,
we had more traffic control equipment in 2001 than in 2000. This lowered our
overall gross profit margin because (i) this equipment category generally
produces losses during the first quarter due to seasonal factors and (ii) this
equipment category generally produces lower gross profit margins than our other
categories. Second, our cost of equipment rental increased in 2001 because more
of our rental equipment was held by us under operating leases rather than being
owned. The increase in the gross profit margin from sales of equipment and
merchandise and other revenue in the six months ended June 30, 2001, primarily
reflected the following: (i) lower costs resulting from our ongoing efforts to
consolidate our suppliers and further capitalize on our purchasing power and
(ii) a shift in mix which resulted in more of our sales being attributable to
higher margin areas such as providing services and selling parts.





                                      21






    Selling, General and Administrative Expenses. Selling, general and
administrative expenses ("SG&A") were $221.7 million, or 16.0% of total
revenues, during the six months ended June 30, 2001 and $211.0 million, or
16.1% of total revenues, during the six months ended June 30, 2000. Although we
have been implementing a number of measures to reduce SG&A, including reducing
the number of administrative personnel, reducing discretionary expenditures and
consolidating certain credit and collection facilities, SG&A as a percentage of
total revenues only decreased very slightly in 2001. This principally reflects
the fact that our revenues from the sales of rental equipment were down
significantly in 2001 for the reasons described above. SG&A as a percentage of
revenues, excluding revenues from the sale of rental equipment, decreased to
16.9% in the six months ended June 30, 2001 from 18.3% in the six months ended
June 30, 2000.



    Restructuring Charge. We recorded a restructuring charge of $28.9 million
in the six months ended June 30, 2001. See "--Restructuring Plan" for
additional information.



    Non-rental Depreciation and Amortization. Non-rental depreciation and
amortization was $53.2 million, or 3.8% of total revenues, in the six months
ended June 30, 2001 and $40.7 million, or 3.1% of total revenues, in the six
months ended June 30, 2000. The increase in the dollar amount of non-rental
depreciation and amortization in the first six months of 2001 primarily
reflected (i) the amortization of goodwill attributable to acquisitions
completed subsequent to the second quarter of 2000 and (ii) additional
non-rental vehicles which have shorter useful lives.



    Interest Expense. Interest expense increased to $114.6 million in the six
months ended June 30, 2001 from $106.2 million in the six months ended June 30,
2000. This increase primarily reflected an increase in the Company's
indebtedness, principally to fund acquisitions.



    Preferred Dividends of a Subsidiary Trust. During the six months ended June
30, 2001 and 2000, preferred dividends of a subsidiary trust were $9.8 million.



    Other (Income) Expense. Other expense was $6.9 million in the six months
ended June 30, 2001 compared with other income of $0.3 million in the six
months ended June 30, 2000. The increase in other expense in the first six
months of 2001 was primarily attributable to the $7.8 million charge we
incurred relating to the refinancing costs of a synthetic lease as described
under "--Debt Refinancing and Extraordinary Item."



    Income Taxes. Income taxes were $25.1 million, or an effective rate of
47.0%, in the six months ended June 30, 2001 compared to $45.8 million, or an
effective rate of 41.5%, in the six months ended June 30, 2000. The increase in
the effective rate in the first six months of 2001 was primarily attributable
to the non-deductibility for income tax purposes of certain costs in the
restructuring charge.



    Extraordinary Item. We recorded an extraordinary charge of $18.1 million
($11.3 million, net of tax) in the six months ended June 30, 2001. See "--Debt
Refinancing and Extraordinary Item" for additional information.



                                      22





Years Ended December 31, 2000 and 1999

    Revenues. Total revenues for 2000 were $2,918.9 million, representing an
increase of 30.7% over total revenues of $2,233.6 million in 1999. Our revenues
in 2000 and 1999 were attributable to: (i) equipment rental ($2,056.7 million,
or 70.5% of revenues, in 2000 compared to $1,581.0 million, or 70.8% of
revenues, in 1999), (ii) sales of rental equipment ($347.7 million, or 11.9% of
revenues, in 2000 compared to $235.7 million, or 10.6% of revenues, in 1999)
and (iii) sales of equipment and merchandise and other revenues ($514.5
million, or 17.6% of revenues, in 2000 compared to $416.9 million, or 18.7% of
revenues, in 1999).


    The 30.7% increase in total revenues in 2000 reflected (i) increased
revenues at locations open more than one year (which accounted for
approximately 12.9 percentage points, 10.9 percentage points of which related
to increases in the volume of transactions and utilization rates and 2.0
percentage points of which related to price increases) and (ii) the net effect
of new rental locations acquired through acquisitions and the opening of
start-up locations partially offset by locations sold or closed (which
accounted for approximately 17.8 percentage points). The increase in revenues
at locations open more than one year primarily reflected (a) an increase in the
volume of rental transactions, (b) an increase in the sale of related
merchandise and parts which was driven by the increase in equipment rental and
sales transactions and (c) an increase in the sale of used equipment.


    Gross Profit. Gross profit increased to $1,088.6 million in 2000 from
$824.9 million in 1999. This increase in gross profit was primarily
attributable to the increase in revenues described above. Our gross profit
margin by source of revenue in 2000 and 1999 was: (i) equipment rental (39.9%
in 2000 and 39.4% in 1999), (ii) sales of rental equipment (40.1% in 2000 and
42.0% in 1999) and (iii) sales of equipment and merchandise and other revenues
(24.9% in 2000 and 24.6% in 1999). The increase in the gross profit margin from
rental revenues in 2000 was primarily attributable to greater equipment
utilization rates and to economies of scale. The decrease in the gross profit
margin from the sales of rental equipment in 2000 reflected the sale of more
late-model used equipment which generally generates lower gross profit margins
than older equipment.

    Selling, General and Administrative Expenses. SG&A was $454.3 million, or
15.6% of total revenues, during 2000 and $352.6 million, or 15.8% of total
revenues, during 1999. SG&A in 1999 included an $8.3 million charge primarily
due to professional fees incurred in connection with a terminated tender offer.
Excluding this charge, SG&A as a percentage of revenues was 15.4% in 1999.

    Non-rental Depreciation and Amortization. Non-rental depreciation and
amortization was $86.3 million, or 3.0% of total revenues, in 2000 and $62.9
million, or 2.8% of total revenues, in 1999.

    Interest Expense. Interest expense increased to $228.8 million in 2000 from
$139.8 million in 1999. This increase primarily reflected (i) an increase in
our indebtedness, principally to fund acquisitions, and (ii) an increase in the
interest rates applicable to our variable rate debt.

    Preferred Dividends of a Subsidiary Trust. During 2000 and 1999, preferred
dividends of a subsidiary trust were $19.5 million.

    Other (Income) Expense. Other income was $1.8 million in 2000 compared to
$8.3 million of other expense in 1999. The other expense in 1999 was
attributable to a $9.9 million charge that principally related to fees that we
paid for a $2.0 billion financing commitment that was subsequently cancelled
upon termination of a tender offer made by us in 1999.

    Income Taxes. Income taxes increased to $125.1 million, or an effective
rate of 41.5%, in 2000 from $99.1 million, or an effective rate of 41.0%, in
1999.

                                      23




Years Ended December 31, 1999 and 1998


    Revenues. Total revenues for 1999 were $2,233.6 million, representing an
increase of 83.0% over total revenues in 1998 of $1,220.3 million. Our revenues
in 1999 and 1998 were attributable to: (i) equipment rental ($1,581.0 million,
or 70.8% of revenues, in 1999 compared to $895.5 million, or 73.4% of revenues,
in 1998), (ii) sales of rental equipment ($235.7 million, or 10.6% of revenues,
in 1999 compared to $119.6 million, or 9.8% of revenues, in 1998) and (iii)
sales of equipment and merchandise and other revenues ($416.9 million, or 18.6%
of revenues, in 1999 compared to $205.2 million, or 16.8% of revenues, in
1998).

    The 83.0% increase in total revenues in 1999 reflected (i) increased
revenues at locations open more than one year (which accounted for
approximately 21.2 percentage points) and (ii) new rental locations acquired
through acquisitions and the opening of start-up locations (which accounted for
approximately 61.8 percentage points). The increase in revenues at locations
open more than one year primarily reflected (a) an increase in the volume of
rental transactions, (b) expansion of the product lines that we offer for sale,
(c) an increase in the sale of related merchandise and parts which was driven
by the increase in equipment rental and sales transactions and (d) an increase
in the sale of used equipment.

    Gross Profit. Gross profit increased to $824.9 million in 1999 from $423.4
million in 1998. This increase in gross profit was primarily attributable to
the increase in revenues described above. Our gross profit margin by source of
revenue in 1999 and 1998 was: (i) equipment rental (39.4% in 1999 and 36.3% in
1998), (ii) sales of rental equipment (42.0% in 1999 and 44.7% in 1998) and
(iii) sales of equipment and merchandise and other revenues (24.6% in 1999 and
22.0% in 1998). The increase in the gross profit margin from rental revenues in
1999 was primarily attributable to greater equipment utilization rates and to
economies of scale. The decrease in the gross profit margin from the sales of
rental equipment in 1999 primarily reflected a shift in mix towards the sale of
more late-model used equipment which generally generates lower gross profit
margins than older equipment. The increase in the gross profit margin from
sales of equipment and merchandise and other revenue in 1999 primarily
reflected the benefits of greater purchasing power.

    Selling, General and Administrative Expenses. SG&A was $352.6 million, or
15.8% of total revenues, during 1999 and $195.6 million, or 16.0% of total
revenues, during 1998. SG&A in 1999 includes an $8.3 million charge primarily
due to professional fees incurred in connection with a terminated tender offer.
Excluding this charge, SG&A as a percentage of revenues decreased to 15.4% in
1999, primarily due to certain economies of scale relating to the increase in
revenues described above.

    Merger-related Expenses. We incurred merger-related expenses in 1998 of
$47.2 million ($33.2 million after-tax) in connection with three acquisitions
completed by us in 1998 that were accounted for as poolings-of-interests. These
expenses consisted of: (i) $18.5 million for investment banking, legal and
accounting services and other merger costs, (ii) $14.5 million of expenses
relating to the closing of duplicate facilities, (iii) $8.2 million for
employee severance and related matters, (iv) $2.1 million for the write down of
the computer systems acquired through our merger with U.S. Rentals and one of
the other acquisitions accounted for as a pooling-of-interests and (v) $3.9
million in other expenses.

    Non-rental Depreciation and Amortization. Non-rental depreciation and
amortization was $62.9 million, or 2.8% of total revenues, in 1999 and $35.2
million, or 2.9% of total revenues, in 1998.

    Interest Expense. Interest expense increased to $139.8 million in 1999 from
$64.2 million in 1998. This increase primarily reflected the fact that our
indebtedness significantly increased in 1999, primarily to fund acquisitions.

                                      24



    Preferred Dividends of a Subsidiary Trust. Preferred dividends of a
subsidiary trust were $19.5 million in 1999 compared with $7.9 million in 1998.

    Other (Income) Expense. Other expense was $8.3 million in 1999 compared
with other income of $4.9 million in 1998. The increase in other expense in
1999 primarily reflected a $9.9 million charge that principally related to fees
paid by us for a $2.0 billion financing commitment that was subsequently
cancelled upon termination of a tender offer.

    Income Taxes. Income taxes increased to $99.1 million, or an effective rate
of 41.0%, in 1999 from $43.5 million, or an effective rate of 55.6%, in 1998.
During 1998, our high effective tax rate reflected (i) the non-deductibility of
$7.4 million for income tax purposes of certain merger-related expenses and
(ii) a $4.8 million charge to recognize deferred tax liabilities of an acquired
business, which was a Subchapter S Corporation prior to being acquired by us.

    Extraordinary Item. We recorded an extraordinary charge of $35.6 million
($21.3 million net of taxes) in 1998. This charge was incurred in connection
with the early extinguishment of certain debt and primarily reflected
prepayment penalties on certain debt of U.S. Rentals.

Liquidity and Capital Resources




Recent Financing Transactions





    In April 2001, we refinanced $1,695.7 million of our indebtedness and other
obligations. In order to effect this refinancing, we:



    .   issued $450.0 million of 10 3/4% Senior Notes Due 2008;



    .   obtained a new senior secured credit facility comprised of a $750.0
        million term loan and a $750.0 million revolving credit facility;



    .   made an initial draw under the new revolving credit facility in the
        amount of $525.0 million; and



    .   used the proceeds from the notes, the new term loan and the initial
        draw under the new revolving credit facility to (i) permanently repay
        the outstanding balance under our old revolving credit facility ($476.0
        million); (ii) repay outstanding term loans ($1,188.5 million) and
        (iii) repay an outstanding synthetic lease ($31.2 million).



In June 2001, we obtained an additional $112.0 million through the
securitization of additional accounts receivable.





Certain Information Concerning Our Credit Facility





    Our revolving credit facility enables URI to borrow up to $750.0 million on
a revolving basis and enables one of our Canadian subsidiaries to borrow up to
$40.0 million (provided that the aggregate borrowings of URI and the Canadian
subsidiary may not exceed $750.0 million). Up to $100.0 million of the
revolving credit facility is available in the form of letters of credit. The
revolving credit facility will mature and terminate on October 20, 2006.



    Borrowings under the revolving credit facility will, until October 20,
2001, accrue interest, at our option, at either (A) the ABR Rate (which is
equal to the greater of (i) the Federal Funds Rate plus 0.5% or (ii) the Chase
Manhattan Bank's prime rate) plus a margin of 1.00% or (B) an adjusted LIBOR
rate plus a margin of 2.0%. From and after October 20, 2001, the above interest
rate margins will be adjusted quarterly based on our funded debt to cash flow
ratio, up to maximum margins of 1.75% and 2.75%, for revolving loans based on
the ABR rate and the adjusted LIBOR rate, respectively, and down to minimum
margins of 0.75% and 1.75%, for revolving loans based on the ABR rate and the
adjusted LIBOR rate, respectively. If at any time an event of default exists,
the interest rate applicable to each loan will increase by 2% per annum.


                                      25






    We are also required to pay the lenders a commitment fee equal to 0.5% per
annum in respect of undrawn commitments under the revolving credit facility.




Sources and Uses of Cash




    During the first six months of 2001, we (i) generated cash from operations
of approximately $298.5 million, (ii) generated cash from the sale of rental
equipment of approximately $72.2 million and (iii) obtained net proceeds from
financing activities of approximately $9.2 million. We used cash during this
period principally to (i) pay consideration for acquisitions and settle certain
outstanding liabilities due to former owners of businesses that we acquired
(approximately $37.8 million), (ii) purchase rental equipment (approximately
$303.3 million), (iii) purchase other property and equipment (approximately
$31.4 million) and (iv) purchase and retire shares of our outstanding common
stock (approximately $24.8 million).



    During 2000, we (i) generated cash from operations of approximately $512.7
million, (ii) generated cash from the sale of rental equipment of approximately
$347.7 million and (iii) obtained net proceeds from financing activities of
approximately $468.1 million. We used cash during this period principally to
(i) pay consideration for acquisitions (approximately $347.3 million), (ii)
purchase rental equipment (approximately $808.2 million), (iii) purchase other
property and equipment (approximately $153.8 million) and (iv) purchase and
retire shares of our outstanding common stock (approximately $31.0 million).


Certain Balance Sheet Changes




    Changes in the First Six Months of 2001. The increase in accounts
receivable at June 30, 2001 compared to December 31, 2000 was attributable to
the increase in revenues due to the seasonally stronger second quarter. The
decrease in inventory at June 30, 2001 compared to December 31, 2000 primarily
reflected increased sales during the second quarter of 2001. The increase in
prepaid expenses and other assets at June 30, 2001 compared to December 31,
2000 was primarily attributable to payment of certain prepaid expenses during
the first six months of 2001. The increase in accounts payable, deferred taxes
and accrued expenses and other liabilities at June 30, 2001 compared to
December 31, 2000 was primarily attributable to the increase in revenues in the
second quarter of 2001.



    The increase in rental equipment at June 30, 2001 compared to December 31,
2000 primarily reflected our equipment purchases during the first six months of
2001. The increase in debt at June 30, 2001 compared to December 31, 2000
primarily reflected borrowings for acquisition related payments and equipment
purchases during the first six months of 2001. The increase in additional
paid-in capital at June 30, 2001 compared to December 31, 2000 was primarily
attributable to the accounting for restricted shares that were issued during
the second quarter of 2001.


    Changes in 2000. Our asset and liability accounts were all higher at
December 31, 2000 than at December 31, 1999, other than accrued expenses and
other liabilities which was lower. The general increase in our asset and
liability accounts primarily reflected the acquisitions and the equipment
purchases made that we made in 2000. The decrease in accrued expenses and other
liabilities primarily reflected the refund of certain income tax payments.

    The decrease in additional paid-in capital at December 31, 2000 compared
with December 31, 1999, primarily reflected the purchase and retirement of
shares of our outstanding common stock offset in part by the issuance of common
stock in connection with an acquisition.

                                      26



Cash Requirements Related to Operations




    Our principal existing sources of cash are borrowings available under our
revolving credit facility ($289.7 million available as of August 7, 2001) and
cash generated from operations. Our cash generated from operations was
approximately $298.5 million and $262.8 million in the first six months of 2001
and the first six months of 2000, respectively. The increase in 2001 primarily
reflected the changes in our operating assets and liabilities discussed above
under "--Certain Balance Sheet Changes." We believe that our existing sources
of cash will be sufficient to support our existing operations over the next 12
months.



    We expect that our principal needs for cash relating to our existing
operations over the next 12 months will be to fund (i) operating activities and
working capital, (ii) the purchase of rental equipment and inventory items
offered for sale, (iii) debt service and (iv) costs relating to the
restructuring charge. We plan to fund such cash requirements relating to our
existing operations from our existing sources of cash described above. In
addition, we plan to seek additional financing through the securitization of
certain of our accounts receivable and equipment.


    We estimate that equipment expenditures for the year 2001 will be
approximately $400 million for our existing operations. These expenditures are
comprised of approximately (i) $150 million of expenditures in order to replace
rental equipment sold, (ii) $200 million of discretionary expenditures to
increase the size of our rental fleet and (iii) $50 million of expenditures for
the purchase of non-rental equipment. We expect that we will fund such
expenditures from proceeds from the sale of used equipment, cash generated from
operations and, if required, borrowings available under our revolving credit
facility.


    While emphasizing internal growth, we may also continue to expand through a
disciplined acquisition program. We expect to pay for future acquisitions using
cash, capital stock, notes and/or assumption of indebtedness. To the extent
that our existing sources of cash described above are not sufficient to fund
such future acquisitions, we will require additional financing and,
consequently, our indebtedness may increase as we implement our growth
strategy. There can be no assurance, however, that any additional financing
will be available or, if available, will be on terms that are satisfactory to
us.


    The recent refinancing of $1,695.7 million of our indebtedness (described
under "--Recent Financing Transactions") extended the maturities of a
significant amount of our indebtedness. Based on the scheduled maturities of
our current indebtedness, we are required to make principal payments of
approximately $15.7 million over the next 12 months. We may also, at our
option, make additional principal payments.





Certain Measures to Reduce Cash Requirements





    As the economy softened, we adopted a number of measures to further control
costs and increase free cash flow. These include the restructuring plan
discussed above under "--Restructuring Plan" and the measures described below.



    Reduce Equipment Purchases. We will purchase less new equipment in 2001
than in 2000 ($400 million budgeted for 2001 compared to approximately $962
million expended in 2000) and will reduce the rate at which we sell used
equipment. The amount of the reduction will depend on future developments,
including the economic outlook, conditions in the used equipment market and our
equipment utilization rate. Based on current conditions, we estimate that our
revenues from the sale of used equipment will be 50-75% lower in 2001 than in
2000.


                                      27




    We estimate that the weighted average age of our rental fleet, which
currently is approximately 29 months, will increase to approximately 32 months
as a result of the planned reduction in the rate at which we purchase new
equipment and sell used equipment. We believe that, because of the young age of
our fleet, our business will not be adversely affected by this increase in
average age.





    Continue to Consolidate Suppliers. We reduced the number of our primary
equipment suppliers from 111 to 28 in 2000. This allowed us to lower our
purchase costs by approximately $150 million in 2000 and should enable us to
save additional amounts in 2001. We are currently in the process of similarly
consolidating our merchandise suppliers.



    Other Cost-Cutting Measures. We are seeking to reduce costs in a number of
other ways, including reducing administrative expenses, consolidating credit
and collection centers, and streamlining advertising.






Relationship Between Holdings and URI

    United Rentals, Inc. ("Holdings") is principally a holding company and
primarily conducts its operations through its wholly owned subsidiary United
Rentals (North America), Inc. ("URI") and subsidiaries of URI. Holdings
provides certain services to URI in connection with its operations. These
services principally include: (i) senior management services, (ii) finance
related services and support, (iii) information technology systems and support
and (iv) acquisition related services. In addition, Holdings leases certain
equipment and real property that are made available for use by URI and its
subsidiaries. URI has made, and expects to continue to make, certain payments
to Holdings in respect of the services provided by Holdings to URI. The
expenses relating to URI's payments to Holdings are reflected on URI's
financial statements as selling, general and administrative expenses. In
addition, although not legally obligated to do so, URI has in the past, and
expects that it will in the future, make distributions to Holdings to, among
other things, enable Holdings to pay dividends on certain preferred securities
(the "Trust Preferred Securities") that were issued by a subsidiary trust of
Holdings in August 1998.

    The Trust Preferred Securities are the obligation of a subsidiary trust of
Holdings and are not the obligation of URI. As a result, the dividends payable
on these securities are reflected as an expense on the consolidated financial
statements of Holdings, but are not reflected as an expense on the consolidated
financial statements of URI. This is the principal reason why the net income
reported on the consolidated financial statements of URI is higher than the net
income reported on the consolidated financial statements of Holdings.

Fluctuations in Operating Results


    We expect that our revenues and operating results may fluctuate from
quarter to quarter or over the longer term. Certain of the general factors that
may cause such fluctuations are discussed under "Risk Factors--Our operating
results may fluctuate which could affect the trading value of our common
stock."


    We are continually involved in the investigation and evaluation of
potential acquisitions. In accordance with accounting principles generally
accepted in the United States, we capitalize certain direct out-of-pocket
expenditures (such as legal and accounting fees) relating to potential or
pending acquisitions. Indirect acquisition costs, such as executive salaries,
general corporate overhead, public affairs and other corporate services, are
expensed as incurred. Our policy is to charge against earnings any capitalized
expenditures relating to any potential or pending acquisition that we determine
will not be consummated. There can be no assurance that in future periods we
will not be required to incur a charge against earnings in accordance with such
policy, which charge, depending upon the magnitude thereof, could adversely
affect our results of operations.

                                      28



    We will be required to incur significant start-up expenses in connection
with establishing each start-up location. Such expenses may include, among
others, pre-opening expenses related to setting up the facility, and expenses
in connection with training employees, installing information systems and
marketing. We expect that, in general, start-up locations will initially
operate at a loss or at less than normalized profit levels. Consequently, the
opening of a start-up location may negatively impact our margins until the
location achieves normalized profitability.

    There may be a lag between the time that we purchase new equipment and
begin to incur the related depreciation and interest expenses and the time that
the equipment begins to generate revenues at normalized rates. As a result, the
purchase of new equipment, particularly equipment purchased in connection with
expanding and diversifying our rental equipment, may periodically reduce
margins.

Seasonality

    Our business is seasonal with demand for our rental equipment tending to be
lower in the winter months. The seasonality of our business has been heightened
by our acquisition of businesses that specialize in renting traffic control
equipment. These businesses tend to generate most of their revenues and profits
in the second and third quarters of the year, slow down during the fourth
quarter and operate at a loss during the first quarter.

Inflation

    Although we cannot accurately anticipate the effect of inflation on our
operations, we believe that inflation has not had, and is not likely in the
foreseeable future to have, a material impact on our results of operations.

Recently Issued Accounting Standards




    In June 1998, the FASB issued, and subsequently amended, SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which became
effective for us on January 1, 2001. Under SFAS No. 133, all derivatives are
required to be recorded as assets or liabilities and measured at fair value.
Gains or losses resulting from changes in the values of derivatives are
recognized immediately or deferred, depending on the use of the derivative and
whether or not it qualifies as a hedge.



    We occasionally use derivative financial instruments to manage our risk
associated with fluctuations in interest rates on our debt. We currently have
interest rate swap agreements that convert $200.0 million of our variable rate
term loan to a fixed rate instrument through 2003. These swap agreements are
designated as cash flow hedges and changes in the fair value of the hedges are
recorded in other comprehensive income and reclassified into earnings in the
same periods during which the hedged transaction affects earnings. There is no
ineffectiveness related to these hedges.





    In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities--a
replacement of FASB Statement No. 125." This standard revises the standards for
accounting for securitizations and other transfers of financial assets and
collateral and requires certain disclosures. This standard is effective for
transfers and servicing of financial assets and extinguishments of liabilities
occurring after March 31, 2001 and for disclosures relating to securitization
transactions and collateral for fiscal years ending after December 15, 2000.
The adoption of SFAS No. 140 did not have a material effect on our consolidated
financial position or results of operations.


                                      29




    In June 2001, the FASB issued SFAS No. 141, "Business Combinations." This
standard addresses financial accounting and reporting for business combinations
and supersedes APB Opinion No. 16, "Business Combinations" and SFAS No. 38,
"Accounting for Preacquisition Contingencies of Purchased Enterprises." All
business combinations in the scope of this Statement are to be accounted for
using one method, the purchase method. This standard is effective for all
business combinations initiated after June 30, 2001.



    In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets." This standard addresses financial accounting and reporting for
acquired goodwill and other intangible assets and supersedes APB Opinion No.
17, "Intangible Assets." This standard is effective for fiscal years beginning
after December 15, 2001. However, this standard is immediately effective in
cases where goodwill and intangible assets are acquired after June 30, 2001.
Under this standard, goodwill and intangible assets deemed to have indefinite
lives will no longer be amortized but will be subject to annual impairment
tests. We are currently evaluating the impact that SFAS No. 142 will have on
our financial statements and will perform a fair value analysis of goodwill in
connection with the adoption of this standard on January 1, 2002.


                                      30



                                   BUSINESS

The Company


    United Rentals is the largest equipment rental company in North America
with more than 740 locations in 47 states, seven Canadian provinces and Mexico.
We offer for rent over 600 different types of equipment to customers that
include construction and industrial companies, manufacturers, utilities,
municipalities, homeowners and others. In 2000, we served more than 1.2 million
customers, completed over 8.4 million rental transactions and generated
revenues and net income of $2.9 billion and $176.4 million, respectively.



    We have the largest fleet of rental equipment in the world, with over
500,000 units having an original purchase price of approximately $3.6 billion.
Our fleet includes:


    . General construction and industrial equipment, such as backhoes,
      skid-steer loaders, forklifts, earth moving equipment, material handling
      equipment, compressors, pumps and generators;

    . Aerial work platforms, such as scissor lifts and boom lifts;


    . General tools and light equipment, such as power washers, water pumps,
      heaters and hand tools;


    . Traffic control equipment, such as barricades, cones, warning lights,
      message boards and pavement marking systems;


    . Trench safety equipment for below ground work, such as trench shields,
      aluminum hydraulic shoring systems, slide rails, crossing plates,
      construction lasers and line testing equipment; and



    . Special event equipment, such as large tents, light towers and power
      units used for sporting, corporate and other events.




    In addition to renting equipment, we sell used rental equipment, act as a
dealer for new equipment and sell related merchandise, parts and service.

    We estimate that the U.S. equipment rental industry has grown from
approximately $6.5 billion in annual rental revenues in 1990 to over $25
billion in 2000, representing a compound annual growth rate of approximately
14.5%. We believe that the principal driver of growth in the equipment rental
industry, in addition to general economic expansion, has been the increasing
recognition by equipment users of the many advantages that equipment rental may
offer compared with ownership. They recognize that by renting they can:

    . avoid the large capital investment required for equipment purchases;

    . access a broad selection of equipment and select the equipment best
      suited for each particular job;

    . reduce storage and maintenance costs; and

    . access the latest technology without investing in new equipment.

    While the construction industry has to date been the principal user of
rental equipment, industrial companies, utilities and others are increasingly
using rental equipment for plant maintenance, plant turnarounds and other
functions requiring the periodic use of equipment. The market for rental
equipment is also benefiting from increased government funding for
infrastructure projects, such as funding under the U.S. Transportation Equity
Act for the 21st Century ("TEA-21") and the Aviation Investment and Reform Act
for the 21st Century ("AIR-21"). TEA-21 earmarks $175 billion for highway

                                      31



construction and $42 billion for transit spending over the 1998-2003 fiscal
period, a 40% increase over the prior six-year period. AIR-21 provides for $40
billion in construction spending over three years to support the FAA's airport
improvement programs.

Competitive Advantages

    We believe that we benefit from the following competitive advantages:

    Large and Diverse Rental Fleet. Our rental fleet is the largest and most
comprehensive in the industry, which allows us to:

    . attract customers by providing "one-stop" shopping;

    . serve a diverse customer base and reduce our dependence on any particular
      customer or group of customers; and

    . serve customers that require substantial quantities or wide varieties of
      equipment.

    Significant Purchasing Power. We purchase large amounts of equipment,
merchandise and other items, which enables us to negotiate favorable pricing,
warranty and other terms with our vendors. Our purchasing power is further
increased by our ongoing efforts to consolidate our vendor base. For example,
we reduced the number of our primary equipment suppliers from 111 to 28 in
2000. This reduction allowed us to lower our equipment purchase costs by
approximately $150 million in 2000 and should enable us to save additional
amounts in 2001. We expect to realize additional savings by consolidating our
merchandise suppliers and negotiating more favorable warranty terms with key
vendors.


    Operating Efficiencies. We generally group our branches into clusters of 10
to 30 locations that are in the same geographic area. Our information
technology systems allow each branch to access all available equipment within a
cluster. We believe that our cluster strategy produces significant operating
efficiencies and increases equipment utilization by enabling us to: (1) market
equipment through all branches within a cluster, (2) cross-market equipment
specialties of different branches within each cluster and (3) reduce costs by
consolidating functions that are common to our more than 740 branches, such as
payroll, accounts payable and credit and collection, into 24 credit offices and
three service centers. In the second quarter of 2001, approximately 10.7% of
our rental revenue was attributable to equipment sharing among branches.


    Information Technology Systems. Our information technology systems
facilitate our ability to make rapid and informed decisions, respond quickly to
changing market conditions, and share equipment among branches. These systems
allow: (1) management to obtain a wide range of operating and financial data,
(2) branch personnel to access and manage branch level data, such as customer
requirements, equipment availability and maintenance histories, and (3)
customers to access their accounts online. These systems promote equipment
sharing among branches by enabling branch personnel to locate needed equipment
within a geographic region, determine its closest location and arrange for its
delivery to a customer's work site. We have an in-house team of approximately
100 information technology specialists that supports our systems and extends
them to new locations.


    Geographic and Customer Diversity. We have more than 740 branches in 47
states, seven Canadian provinces and Mexico and served more than 1.2 million
customers in 2000. Our customers are diverse, ranging from Fortune 500
companies to small companies and homeowners, and in 2000 our top ten customers
accounted for approximately 2% of our revenues. We believe that our geographic
and customer diversity provide us with many advantages including: (1) enabling
us to better serve National Account customers with multiple locations, (2)
helping us achieve favorable


                                      32



resale prices by allowing us to access used equipment resale markets across the
country, (3) reducing our dependence on any particular customer and (4)
reducing the impact that fluctuations in regional economic conditions have on
our overall financial performance.


    National Account Program. Our National Account sales force is dedicated to
establishing and expanding relationships with larger companies, particularly
those with a national or multi-regional presence. We offer our National Account
customers the benefits of a consistent level of service across North America
and a single point of contact for all their equipment needs. Our National
Account team includes 39 professionals serving over 1,500 National Account
customers, including more than 130 new accounts added in the second quarter of
2001. We estimate our revenues from National Account customers will increase to
approximately $400.0 million in 2001 from $245.0 million in 2000.



    Risk Management and Safety Programs. We place great emphasis on risk
reduction and safety and believe that we have one of the most comprehensive
risk management and safety programs in the industry. Our risk management
department is staffed by 41 experienced professionals and is responsible for
implementing our safety programs and procedures, developing our employee and
customer training programs and managing any claims against us.


    Experienced Senior Management. Our senior management team is comprised of
executives with proven track records. Our management team includes Bradley S.
Jacobs, John N. Milne and Michael J. Nolan, who together with others founded
our company in September 1997, and Wayland R. Hicks who joined them shortly
thereafter. Prior to the founding of our company, Mr. Jacobs served as the
Chairman and Chief Executive Officer of United Waste Systems, Inc., which he
founded in 1989, and Messrs. Milne and Nolan served as members of the United
Waste senior management team for periods of seven and six years, respectively.
United Waste was sold in August 1997 and, at the time, was the sixth largest
provider of integrated, non-hazardous solid waste management services in the
United States. Mr. Hicks, prior to joining our company, held senior executive
positions at Xerox Corporation, where he worked for 28 years, including
Executive Vice President, Corporate Operations and Executive Vice President,
Corporate Marketing and Customer Support Operations. Mr. Hicks also served as
Vice Chairman and Chief Executive Officer of Nextel Communications Corp.
(1994-1995).

    Strong and Motivated Branch Management. Each of our branches has a
full-time branch manager who is supervised by one of our 63 district managers
and nine regional vice presidents. We believe that our managers are among the
most knowledgeable and experienced in the industry, and we empower them--within
budgetary guidelines--to make day-to-day decisions concerning staffing,
pricing, equipment purchasing and other branch matters. Management closely
tracks branch, district and regional performance with extensive systems and
controls, including performance benchmarks and detailed monthly operating
reviews. We promote equipment sharing among branches by linking the
compensation of branch managers and other personnel to their branch's financial
performance and return on assets.

    Flexible Business Strategy.  We generate significant cash from operations
that is available for growth investment or debt reduction. In response to the
slowing economy at the beginning of this year, we decreased the rate at which
we purchase new equipment, open new locations and make acquisitions, thereby
increasing cash available for debt reduction. We expect to accelerate our
growth activities as economic conditions warrant.

                                      33



Strategy

    We have established the following key business strategies:

    Enhance Industry Leadership Position. We intend to use our extensive fleet,
broad geographic coverage, advanced information technology systems and depth of
experience of our senior and branch management to generate further growth and
increase our market share by:

    . actively managing the composition and size of our fleet to meet customer
      needs and respond to local demand;

    . promoting equipment sharing and cross-marketing of equipment specialties
      among branches in geographic regions;

    . focusing on providing outstanding customer service and support;

    . marketing our services to existing and potential National Account
      customers that can benefit from our ability to provide a broad selection
      of equipment and a consistently high level of service throughout North
      America;

    . marketing our extensive fleet of specialized lines of equipment,
      including (1) aerial work platforms for use in large projects requiring
      significant amounts of equipment for extended periods of time, (2)
      traffic control equipment for use in infrastructure projects and (3)
      trench safety equipment required for use in below ground work in order to
      comply with government worker safety standards; and

    . training our sales force and branch personnel in value-added sales
      techniques to achieve customer satisfaction and maximize the value of
      each transaction.

    Maintain Disciplined Approach to Growth Through New Branches and
Acquisitions. We intend to continue to selectively open new branches and make
acquisitions that will expand our geographic reach, enhance our operating
efficiency and increase our market share. In seeking acquisition candidates, we
generally focus on those that will have the potential to be immediately
accretive to earnings.

    Rapidly Adapt to Changing Economic Conditions. We have made significant
investments in new equipment over the past several years and, as a result, have
one of the most modern rental fleets in the industry. The young age of our
fleet gives us the flexibility to respond to an economic downturn by reducing
the rate at which we purchase new equipment and sell used equipment. We
anticipate significantly increasing our free cash flow from operations in 2001
by reducing our equipment expenditures to approximately $400 million, compared
to $962 million in 2000.

Products and Services

    We offer for rent a wide variety of equipment to customers that include
construction and industrial companies, manufacturers, utilities,
municipalities, homeowners and others. We also sell used equipment, act as a
dealer for many types of new equipment, and sell related merchandise, parts and
service. In addition, we have a subsidiary that develops and markets software
for use by equipment rental companies in managing and operating multiple branch
locations.

    For financial information concerning our foreign and domestic operations,
see note 14 of the notes to our audited consolidated financial statements
included herein.

Equipment Rental

    We offer for rent over 600 different types of equipment on a daily, weekly
or monthly basis. The types of equipment that we offer include general
construction and industrial equipment; aerial work

                                      34



platforms; traffic control equipment; trench safety equipment; equipment for
sporting, corporate and other special events; and general tools and light
equipment. In 2000, our average rental period was approximately six days, and
the average value per rental transaction was $209.


    Our equipment rental fleet is the largest in the world and is also one of
the newest and best maintained. Our fleet includes over 500,000 units and has
an original purchase price of approximately $3.6 billion and a weighted average
age of approximately 29 months. We estimate that (i) aerial work platforms
accounted for approximately 24% of our equipment rental revenues in 2000, (ii)
earth moving equipment accounted for approximately 13% of such revenues and
(iii) forklifts accounted for approximately 10% of such revenues.



    We vary our equipment mix from branch to branch in response to local market
conditions and customer requirements. Most of our branches offer a general mix
of equipment, while some specialize in specific equipment categories such as
aerial work platforms or traffic control equipment.


Used Equipment Sales

    In order to maintain a modern fleet and optimize our equipment mix, we
routinely sell used rental equipment and invest in new equipment. We have
generally been able to obtain favorable sales prices due to our comprehensive
maintenance program and our national sales force that can access many resale
markets across North America.

    We principally sell used equipment through our sales force and our web site
(www.unitedrentals.com) which includes an online database of used equipment
available for sale. We also sell our used equipment to used equipment dealers
and through public auctions. In addition, we sometimes trade in used equipment
to our vendors when we buy new equipment.

New Equipment Sales

    We are a dealer for many leading equipment manufacturers. These
manufacturers include Genie Industries, Inc., JLG Industries, Inc., and
SkyJack, Inc. (aerial lifts); Multiquip, Inc. (compaction equipment,
generators, pumps and concrete equipment); Bomag and Wacker (compaction
equipment); Sullair Corporation (compressors); Skytrack and Lull (rough terrain
reach forklifts); Scattrack (skid-steer loaders and mini-excavators); Terex
Corporation (off-road dump trucks and telehandlers); and Honda USA (pumps and
generators). Typically, dealership agreements do not have a specific term and
may be terminated at any time. The type of new equipment that we sell varies by
location.

Related Merchandise, Parts and Other Services

    At most of our locations, we sell equipment parts and a variety of supplies
and merchandise that may be used with our rental equipment, such as saw blades,
fasteners, drill bits, hard hats, gloves and other safety equipment. At some of
our branches, we also offer repair and maintenance services for equipment that
is owned by our customers.

Our Rentalman(TM) Software

    We have a subsidiary that develops and markets software for use by
equipment rental companies in managing and operating multiple branch locations.
Seven of the ten largest equipment rental companies, including United Rentals,
use the Rentalman(TM) software package developed by our subsidiary.

Customers


    Our customer base is highly diversified and ranges from Fortune 500
companies to small businesses and homeowners. No single customer accounted for
more than 0.5% of our revenues during 2000 and our top 10 customers accounted
for approximately 2% of our revenues in 2000.


                                      35



    Our customer base varies by branch and is determined by several factors,
including the equipment mix and marketing focus of the particular branch and
the business composition of the local economy. Our customers include:

    . construction companies that use equipment for building and renovating
      commercial buildings, warehouses, industrial and manufacturing plants,
      office parks, airports, residential developments and other facilities;

    . industrial companies--such as manufacturers, chemical companies, paper
      mills, railroads, ship builders and utilities--that use equipment for
      plant maintenance, upgrades, expansion and construction;

    . municipalities that require equipment for a variety of purposes, such as
      traffic control and highway construction and maintenance;

    . sponsors of sporting, corporate, entertainment and other large special
      events--including events such as the Super Bowl, the U.S. Open Golf
      Championship, the NASCAR Brickyard 400, the PGA Championship, the Ryder
      Cup, concerts and charity events; and

    . homeowners and other individuals that use equipment for projects that
      range from simple repairs to major renovations.

Sales and Marketing

    We market our products and services through multiple channels as described
below.


    Sales Force. As of August 10, 2001, we had a total of 2,528 salespeople,
including 1,190 store-based customer service representatives and 1,338
field-based salespeople. Our sales force calls on existing and potential
customers and assists our customers in planning for their equipment needs.


    National Account Program. Our National Account sales force is dedicated to
establishing and expanding relationships with large customers, particularly
those with a national or multi-regional presence. The National Account team
closely coordinates its efforts with the local sales force in each area. Our
National Account team currently includes 39 sales professionals.

    E-Rental Store(TM). Our customers can rent or buy equipment online 24 hours
a day seven days a week at our E-Rental Store(TM), which is part of our web
site. Our customers can also use our URdata(TM) application to access
up-to-the-minute reports on their business activity with us.

    Advertising. We promote our business through local and national advertising
in various media, including trade publications, yellow pages, the Internet and
direct mail. We also regularly participate in industry trade shows and
conferences and sponsor a variety of local promotional events.

Suppliers

    We have been making ongoing efforts to consolidate our vendor base in order
to further increase our purchasing power. We estimate that our largest supplier
accounted for approximately 24% of our equipment purchases in 2000, and that
our top 10 largest suppliers accounted for approximately 73% of our equipment
purchases during that period. We believe that we have alternative sources of
supply for each of our material equipment categories.


                                      36



Information Technology Systems

    We have advanced information technology systems which facilitate rapid and
informed decision making and enable us to respond quickly to changing market
conditions. Each branch is equipped with one or more workstations that are
electronically linked to our other locations and to our AS/400 system located
at our data center. All rental transactions are entered at these workstations
and processed on a real-time basis. Personnel at each location are able to
access the system 24 hours a day in order to determine equipment availability
and monitor business activity on a real-time basis. They can also obtain
customized reports on a wide range of operating and financial data, including
equipment utilization, rental rate trends, maintenance histories and customer
transaction histories.

    Our information technology systems and our web site are supported by our
in-house group of approximately 100 information technology specialists. This
group trains our personnel at the branch location; upgrades and customizes our
systems; provides hardware and technology support; operates a support desk to
assist branch personnel in the day-to-day use of the systems; extends the
systems to newly acquired locations; and manages our web site.

Competition

    The equipment rental industry is highly fragmented and competitive. Our
competitors primarily include small, independent businesses with one or two
rental locations; regional competitors which operate in one or more states;
public companies or divisions of public companies; and equipment vendors and
dealers who both sell and rent equipment directly to customers. We believe
that, in general, large companies enjoy significant competitive advantages
compared to smaller operators, including greater purchasing power, a lower cost
of capital, the ability to provide customers with a broader range of equipment
and services and with newer and better maintained equipment, and greater
flexibility to transfer equipment among locations in response to customer
demand. For additional information, see "--Competitive Advantages."

                                      37



Properties


    As of June 30, 2001, we operated 742 branch locations. Of these locations,
658 were in the United States, 83 were in Canada and one was in Mexico. The
number of locations in each state or province is shown below.


      United States


                                            
           .Alabama (12)     .Louisiana (8)       .North Dakota (10)
           .Alaska (5)       .Maine (2)           .Ohio (13)
           .Arizona (20)     .Maryland (18)       .Oklahoma (3)
           .Arkansas (3)     .Massachusetts (12)  .Oregon (26)
           .California (111) .Michigan (6)        .Pennsylvania (15)
           .Colorado (18)    .Minnesota (12)      .Rhode Island (2)
           .Connecticut (10) .Mississippi (2)     .South Carolina (9)
           .Delaware (5)     .Missouri (9)        .South Dakota (10)
           .Florida (35)     .Montana (1)         .Tennessee (10)
           .Georgia (22)     .Nebraska (6)        .Texas (52)
           .Idaho (2)        .Nevada (15)         .Utah (9)
           .Illinois (17)    .New Hampshire (2)   .Virginia (12)
           .Indiana (16)     .New Jersey (9)      .Washington (28)
           .Iowa (14)        .New Mexico (5)      .Wisconsin (8)
           .Kansas (6)       .New York (18)       .Wyoming (2)
           .Kentucky (7)     .North Carolina (21)





                                  
              Canada                 Mexico
              .Alberta (2)           .Nuevo Leon, Monterrey (1)
              .British Columbia (17)
              .Manitoba (3)
              .Newfoundland (9)
              .Ontario (38)
              .Quebec (12)
              .Saskatchewan (2)



    Our branch locations generally include facilities for displaying equipment
and, depending on the location, may include separate equipment service areas
and storage areas.


    We own 91 of our rental locations and lease the other locations. Our leases
provide for varying terms and include 76 leases that are renewable on a
month-to-month basis and 54 leases without renewal options that provide for a
remaining term of less than one year.



    We maintain a fleet of approximately 13,370 vehicles that are used for
delivery, maintenance and sales functions. We own a portion of this fleet and
lease the remainder.



    Our corporate headquarters are located in Greenwich, Connecticut, where we
occupy approximately 40,000 square feet under a lease for approximately 12,000
square feet that extends until 2003 and a lease for approximately 28,000 square
feet that extends until 2004 (subject to a two-year renewal option).


Environmental and Safety Regulations

    Our operations are subject to numerous laws governing environmental
protection and occupational health and safety matters. These laws regulate such
issues as wastewater, stormwater, solid and hazardous wastes and materials, and
air quality. Under these laws, we may be liable for,

                                      38



among other things, (1) the costs of investigating and remediating
contamination at our sites as well as sites to which we sent hazardous wastes
for disposal or treatment regardless of fault and (2) fines and penalties for
non-compliance. Our operations generally do not raise significant environmental
risks, but we use hazardous materials to clean and maintain equipment, and
dispose of solid and hazardous waste and wastewater from equipment washing, and
store and dispense petroleum products from underground and above-ground storage
tanks located at certain of our locations.

    Based on the conditions currently known to us, we do not believe that any
pending or likely remediation and compliance costs will have a material adverse
effect on our business. We cannot be certain, however, as to the potential
financial impact on our business if new adverse environmental conditions are
discovered or environmental and safety requirements become more stringent. If
we are required to incur environmental compliance or remediation costs that are
not currently anticipated by us, our business could be adversely affected
depending on the magnitude of the cost.

Employees


    As of August 10, 2001, we had 15,834 employees. Of these employees, 4,099
are salaried personnel and 11,735 are hourly personnel. Collective bargaining
agreements relating to 66 separate locations cover approximately 1,207 of our
employees. We believe our relations with our employees are satisfactory.


Legal Proceedings

    We are exposed to various possible claims relating to our business. These
possible claims include those relating to (1) personal injury or death caused
by equipment rented or sold by us, (2) motor vehicle accidents involving our
delivery and service personnel and (3) employment related claims.


    We are currently party to various litigation matters involving ordinary and
routine claims incidental to our business. We cannot estimate with certainty
our ultimate legal and financial liability with respect to such pending
litigation matters. However, we believe, based on our examination of such
matters, that our ultimate liability will not have a material adverse effect on
our financial position, results of operations or cash flows.


                                      39



                                  MANAGEMENT

Information Concerning Directors and Executive Officers

    The table below identifies, and provides certain information concerning,
our directors and executive officers:




       Name         Age                Positions(1)
       ----         ---                ------------
                  
Bradley S. Jacobs.. 45  Chairman, Chief Executive Officer and
                        Director

Wayland R. Hicks... 58  Vice Chairman, Chief Operating Officer and
                        Director

John N. Milne...... 42  Vice Chairman, President, Chief Acquisition
                        Officer, Secretary and Director

Michael J. Nolan... 40  Chief Financial Officer

Leon D. Black...... 50  Director(2)

Richard D. Colburn. 90  Director

Ronald M. DeFeo.... 49  Director

Michael S. Gross... 39  Director(2)

Richard J. Heckmann 57  Director

John S. McKinney... 47  Director

Gerald Tsai, Jr.... 72  Director

Timothy J. Tully... 37  Director

Christian M. Weyer. 76  Director


--------
(1) For information concerning the term served by directors, see "--Right of
    Holders of Series A Preferred to Elect Directors" and "--Classification of
    Directors."
(2) Messrs. Black and Gross were elected directors by the holders of the Series
    A Preferred. See "--Right of Holders of Series A Preferred to Elect
    Directors."

    Bradley S. Jacobs has been Chairman, Chief Executive Officer and a director
of our company since its formation in September 1997. Mr. Jacobs founded United
Waste Systems, Inc. and served as its Chairman and Chief Executive Officer from
its inception in 1989 until the sale of the company in August 1997. From 1984
to July 1989, Mr. Jacobs was Chairman and Chief Operating Officer of Hamilton
Resources Ltd., an international trading company, and from 1979 to 1983, he was
Chief Executive Officer of Amerex Oil Associates, Inc., an oil brokerage firm
that he co-founded.

    Wayland R. Hicks has been Chief Operating Officer of our company since
November 1997 and a director since June 1998. He also served as President of
our company during the period from November 1997 until September 1998, when he
became Vice Chairman. Mr. Hicks previously held various senior executive
positions at Xerox Corporation where he worked for 28 years (1966-1994). His
positions at Xerox Corporation included Executive Vice President, Corporate
Operations (1993-1994), Executive Vice President, Corporate Marketing and
Customer Support Operations (1989-1993) and Executive Vice President,
Engineering and Manufacturing--Xerox Business Products and Systems Group
(1987-1989). Mr. Hicks also served as Vice Chairman and Chief Executive Officer
of Nextel Communications Corp. (1994-1995) and as Chief Executive Officer and
President of Indigo N.V. (1996-1997). He is also a director of Maytag
Corporation.

    John N. Milne has been Vice Chairman, Chief Acquisition Officer and a
director of our company since its formation in September 1997 and President
since June 2001. Mr. Milne was Vice Chairman

                                      40



and Chief Acquisition Officer of United Waste Systems, Inc. from 1993 until
August 1997 and held other senior executive positions at United Waste from 1990
until 1993. From September 1987 to March 1990, Mr. Milne was employed in the
Corporate Finance Department of Drexel Burnham Lambert Incorporated.

    Michael J. Nolan has been Chief Financial Officer of our company since its
formation in September 1997. Mr. Nolan served as the Chief Financial Officer of
United Waste Systems, Inc. from February 1994 until August 1997. He served in
other finance positions at United Waste from November 1991 until February 1994,
including Vice President, Finance, from October 1992 to February 1994. From
1985 until November 1991, Mr. Nolan held various positions at the accounting
firm of Ernst & Young, including senior audit manager.

    Leon D. Black became a director of our company in January 1999. Mr. Black
is one of the founding principals of Apollo Advisors, L.P. (which was
established in August 1990 and which, together with its affiliates, acts as the
managing general partner of several private securities investment funds) and
Apollo Real Estate Advisors, L.P. (which, together with its affiliates, acts as
the managing general partner of several real estate investment funds). Mr.
Black is also a director of Samsonite Corporation, Sequa Corporation, Allied
Waste Industries, Inc., Wyndham International, Inc., and Vail Resorts, Inc. He
also serves as a trustee of The Museum of Modern Art, Mount Sinai--NYU Medical
Center, Lincoln Center for the Performing Arts, Vail Valley Foundation, The
Metropolitan Museum of Art, The Jewish Museum, Cardozo Law School, Spence
School, Prep for Prep and The Asia Society.

    Richard D. Colburn became a director of our company in September 1998
following the merger of our company with U.S. Rentals. Mr. Colburn was Chairman
and sole shareholder of U.S. Rentals for 22 years. Mr. Colburn is a private
investor.

    Ronald M. DeFeo has been a director of our company since October 1997. Mr.
DeFeo is the Chairman, Chief Executive Officer, President and a director of
Terex Corporation, a leading global provider of equipment for the
manufacturing, mining and construction industries. Mr. DeFeo joined Terex in
1992 as President of the Terex heavy equipment group and was appointed
President and Chief Operating Officer in 1993 and Chief Executive Officer in
1995. From 1984 to 1992, Mr. DeFeo held various management positions at
Tenneco, Inc., including Senior Vice President and Managing Director of Case
Europe.

    Michael S. Gross became a director of our company in January 1999. Mr.
Gross is one of the founding principals of Apollo Advisors, L.P. (which was
established in August 1990 and which, together with its affiliates, acts as the
managing general partner of several private securities investment funds). Mr.
Gross is also a director of Allied Waste Industries, Inc., Breuner's Home
Furnishings Corp., Clark Enterprises, Inc., Converse, Inc., Encompass Services
Corporation, Florsheim Group, Inc., Pacer International Inc., Rare Medium
Group, Inc., and Saks Incorporated. Mr. Gross is a founding member, and serves
on the executive committee, of Youth Renewal Fund and is the Chairman of the
Board of the Mt. Sinai Children's Center Foundation.

    Richard J. Heckmann has been a director of our company since October 1997.
Mr. Heckmann has served since September 1999 as Chairman of Vivendi Water, the
water products group of Vivendi S.A., a worldwide utility and communications
company. Mr. Heckmann joined Vivendi following Vivendi's acquisition in April
1999 of United States Filter Corporation, a leading global provider of
industrial and commercial water and wastewater treatment systems and services.
Mr. Heckmann was Chairman, President and Chief Executive Officer of United
States Filter Corporation from 1990 until its acquisition by Vivendi. Mr.
Heckmann is also a director of Vivendi Environmental Corp., K2 Inc. and
Philadelphia Suburban Corporation.

    John S. McKinney became a director of our company in September 1998
following the merger of our company with U.S. Rentals. He also served as Vice
President of our company until the end of 2000. Mr. McKinney served as Chief
Financial Officer of U.S. Rentals from 1990 until the merger and

                                      41



as Controller of U.S. Rentals from 1988 until 1990. Prior to joining U.S.
Rentals, Mr. McKinney held various positions at Iomega Corporation, including
Assistant Controller, and at the accounting firm of Arthur Andersen & Co.


    Gerald Tsai, Jr. has been a director of our company since December 1997.
Mr. Tsai served as Chairman, Chief Executive Officer and President of Delta
Life Corporation, an insurance company, from 1993 until the sale of the company
in October 1997. Mr. Tsai was Chairman of the Executive Committee of the Board
of Directors of Primerica Corporation, a diversified financial services
company, from December 1988 until April 1991, and served as Chief Executive
Officer of Primerica Corporation from April 1986 until December 1988. Mr. Tsai
is currently a private investor and serves as a director of IPnetwork, Inc.,
Saks Incorporated, Satmark Media Group, Sequa Corporation, Triarc Companies,
Inc. and Zenith National Insurance Corp. He also serves as a trustee of Boston
University, Mount Sinai-NYU Medical Center and NYU School of Medicine
Foundation Board.


    Timothy J. Tully became a director of our company in June 2001. Mr. Tully
is the co-founder of Tully Capital Partners, LLC (an equity investor in public
and private companies) and Heron Investments, LLC ( a money management and
investment advisory company). Since 1997, he has served as the managing member
of these companies and of several other private investment vehicles. Mr. Tully
was previously a real estate investor involved in the acquisition, operation
and sale of commercial properties (1991-1997) and an equity options specialist
and market maker for the options trading division formerly operated by the New
York Stock Exchange (1986-1991).

    Christian M. Weyer became a director of our company in December 1998. Mr.
Weyer has been in the international banking business for 33 years and has
served as President of Enerfin S.A., an international trade and financial
advisory firm, since 1985. From May 1988 to December 1992, Mr. Weyer was a
member of senior management at Banque Indosuez in Geneva, Switzerland, with
responsibility for matters relating to commercial banking, and from 1971 to
1985, held various senior management positions at Banque Paribas and its
affiliates (including President of Banque Paribas (Suisse) in Geneva during
1984). Prior to 1971, Mr. Weyer held senior management positions with Chase
Manhattan Bank in Paris and in Geneva.

Right of Holders of Series A Preferred to Elect Directors

    In January 1999, we sold 300,000 shares of our Series A Perpetual
Convertible Preferred Stock ("Series A Preferred") to Apollo.

    The holders of the Series A Preferred, voting separately as a single class,
have the right to elect:

    . two directors, if (as of the record date for such vote) the aggregate
      number of shares of common stock that are issuable upon conversion of
      Series A Preferred then held by Apollo, Apollo Management IV, L.P., or
      their affiliates (plus any shares of common stock then held by such
      entities that were issued upon conversion of the Series A Preferred) is
      at least eight million; or

    . one director, if (as of the record date for such vote) the aggregate
      number of shares of common stock that are issuable upon conversion of
      Series A Preferred then held by Apollo, Apollo Management IV, L.P., or
      their affiliates (plus any shares of common stock then held by such
      entities that were issued upon conversion of the Series A Preferred) is
      at least four million but less than eight million.

    Based on the number of shares of Series A Preferred that are currently held
by Apollo, the holders of the Series A Preferred have the right to elect two
directors.

                                      42



    Any director that is elected by the holders of the Series A Preferred,
voting separately as a single class, holds office until the next annual meeting
of stockholders and the election and qualification of a successor (or the
earlier resignation or removal of such director).

    If the holders of the Series A Preferred do not have the right, voting
separately as a single class, to elect any directors pursuant to provisions
described above, then the holders of the Series A Preferred have the right to
vote for the election of directors of our company together with the holders of
the common stock, as a single class, with each share of Series A Preferred
entitled to one vote for each share of common stock issuable upon conversion of
such share of Series A Preferred.

Agreement Relating to Election of Directors

    Mr. Hicks' employment agreement provides that at each annual meeting of
stockholders of our company that occurs during the term of the agreement and at
which Mr. Hicks' term as director is scheduled to expire, we will nominate Mr.
Hicks for re-election as a director.

Classification of Directors

    The directors of our company (excluding any elected by the holders of the
Series A Preferred) are divided into three classes as follows:

       Class 1. The members of this class are Messrs. Hicks, McKinney and Tsai.
    The term of office of this class will expire at our annual meeting of
    stockholders in 2002.

       Class 2. The members of this class are Messrs. DeFeo, Heckmann and
    Tully. The term of office of this class will expire at our annual meeting
    of stockholders in 2003.

       Class 3. The members of this class are Messrs. Colburn, Jacobs, Milne
    and Weyer. The term of office of this class will expire at our annual
    meeting of stockholders in 2004.

    At each annual meeting of stockholders, successors to directors of the
class whose term expires at such meeting will be elected to serve for
three-year terms and until their successors are elected and qualified.

Committees of the Board

    The board of directors has three standing committees: the Audit Committee,
the Compensation/ Stock Option Committee, and the Special Stock Option
Committee. The board of directors does not have a Nominating Committee.

    The responsibilities of the Audit Committee include selecting the firm of
independent accountants to be appointed to audit our financial statements and
reviewing the scope and results of the audit with the independent accountants.
The members of the Audit Committee are Messrs. DeFeo, Heckmann and Tsai. Each
member of the Audit Committee is independent within the meaning of the New York
Stock Exchange's listing standards.

    The responsibilities of the Compensation/Stock Option Committee include
making recommendations with respect to the compensation to be paid to officers
and directors, administering any stock plan in which officers or directors are
eligible to participate and approving the grant of awards pursuant to any such
plan. The members of this committee are Messrs. DeFeo, Heckmann and Tsai.

    The responsibilities of the Special Stock Option Committee include
administering any stock plan in which officers and directors are not eligible
to participate and approving the grant of awards to persons who are not
officers or directors. The members of this committee are Messrs. Jacobs and
Milne.

                                      43



Employment, Severance and Change-of-Control Arrangements

Employment Agreements

    We have entered into employment agreements with each of our executive
officers. Certain information with regard to these agreements is set forth
below.

    Base Salary. Our executive officers are currently being paid base salaries
at the following annual rates: Mr. Jacobs ($485,000), Mr. Hicks ($450,000), Mr.
Milne ($335,000) and Mr. Nolan ($285,000). These salary levels reflect
increases approved by our board, from time to time, and are above the minimum
salary levels originally provided for by these agreements (except in the case
of Mr. Hicks).

    Bonus. The agreements do not provide for mandatory bonuses. However, the
agreements provide that, in addition to the compensation specifically provided
for, we may pay such salary increases, bonuses or incentive compensation as may
be authorized by our board of directors.

    Certain of the agreements provide that the employee is entitled to
participate in certain specified insurance, retirement, compensation and
benefit plans if such plans are made available to other specified executives of
the company.

    Term. The employment agreements with the following executives provide that
the term shall automatically renew so that at all times the balance of the
terms will not be less than the period hereinafter specified with respect to
such executive: Mr. Jacobs (five years), Mr. Milne (five years) and Mr. Nolan
(three years). The employment agreement with Mr. Hicks provides for a term
extending until November 2003.

    Termination and Severance. Under each of the agreements, we or the employee
may at any time terminate the agreement, with or without cause. However, we are
required to make severance payments to the extent described below.

    The employment agreement with Mr. Jacobs provides that he is entitled to
severance benefits in the event that (i) his employment agreement is terminated
by us without Cause (as defined in the employment agreement), (ii) he
terminates his employment agreement for Good Reason (as defined in the
employment agreement) or because of a breach by us of our obligations
thereunder, (iii) his employment is terminated as a result of death or (iv) our
company or he terminates the employment agreement due to his disability. The
severance benefits include (a) a lump sum payment equal to 13.51 times the sum
of his annual base salary at the time of termination plus the highest annual
cash bonus paid to him in the preceding three years (except the multiple is
five rather than 13.51 if the termination is due to death or disability) and
(b) the continuation of his benefits for the remaining term. The term "Good
Reason" is defined in the employment agreement and includes, among other
things, the assignment to him of any duties inconsistent with, or a diminution
of, his position, duties, titles, offices, responsibilities, and status with
our company or his removal from his current positions or any failure to reelect
him to his current positions.

    The employment agreement with Mr. Milne contains a severance provision that
is the same as described above for Mr. Jacobs, except that the severance
benefit is equal to (a) a lump sum payment equal to five times the sum of his
annual base salary at the time of termination plus the highest annual bonus
paid to him in the preceding three years and (b) the continuation of his
benefits for the remaining term. The agreement with Mr. Milne also provides for
a greater severance payment under certain circumstances as described in the
second following paragraph.

    The employment agreement with Mr. Hicks provides that he is entitled to a
severance payment in the amount of $1 million in the event that his employment
agreement is terminated by our company without Cause (as defined in the
employment agreement) or he terminates his employment for Good Reason (as
defined in the employment agreement). The agreement with Mr. Hicks also
provides for a greater severance payment under certain circumstances as
described in the following paragraph.


                                      44



    The employment agreements with Messrs. Hicks, Milne and Nolan provide that
the executive is entitled to a specified severance payment if the executive
resigns (or his employment is otherwise terminated) within 90 days after Mr.
Jacobs terminates his employment agreement for Good Reason (which for this
purpose means the assignment to Mr. Jacobs of any duties inconsistent with, or
a diminution of, his position, duties, titles, offices, responsibilities, and
status with our company or any removal of Mr. Jacobs from his current positions
or any failure to reelect Mr. Jacobs to his current positions). The specified
severance payment is equal to a specified multiple of the sum of (x) the
executive's annual base salary in effect at the time of termination plus (y)
the highest annual cash bonus (if any) paid by our company to the executive
during the three-year period preceding the date of termination. The specified
multiple used for calculating the severance payment is 9.655, in the case of
Mr. Hicks, 10.91, in the case of Mr. Milne, and 8.67, in the case of Mr. Nolan.

    The employment agreements with each executive also provide that if any
portion of the required severance payment to the executive constitutes an
"excess parachute payment" (as defined in Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code")), the executive is entitled to receive a
payment sufficient on an after-tax basis to offset any excise tax payable by
the executive pursuant to Section 4999 of the Code. Any payment constituting an
"excess parachute payment" would not be deductible by our company.

    Options. Each of the agreements provides that all stock options at any time
to be granted to the executive will automatically vest upon a "change of
control" (as defined in the agreement) of our company.

    Other Provisions. The agreement with Mr. Hicks provides that at each annual
meeting of the stockholders of our company which occurs during the term of the
agreement and at which Mr. Hicks' term as director would be scheduled to
expire, we will nominate Mr. Hicks for re-election as a director.

Restricted Stock Agreements

    We have entered into restricted stock agreements with each of our executive
officers. The shares of restricted stock held by each executive is as follows:
Mr. Jacobs (800,000 shares), Mr. Hicks (500,000 shares), Mr. Milne (470,000
shares) and Mr. Nolan (235,000 shares). The restricted stock held by an
executive will vest on June 5, 2011 provided he is then still employed by us,
or, if earlier, the first to occur of the following (except that clauses (3),
(4) and (5) only apply to Messrs. Jacobs, Hicks and Milne): (1) a "change of
control" (as defined in the agreement) occurs; (2) he dies, retires after age
60, or is permanently disabled while employed by us; (3) we terminate his
employment without cause (as defined in the agreement); (4) he resigns after we
fail to nominate him to continue as a director; (5) he resigns after we reduce
his duties, authority, title or compensation; (6) he resigns after we direct
him to relocate or substantially increase his travel; or (7) he resigns after
Mr. Jacobs resigns and Mr. Jacobs' resignation is for one of the reasons
enumerated in the preceding three clauses.

                             CERTAIN TRANSACTIONS




    Mr. DeFeo, a director of our company, is the Chief Executive Officer and a
director of Terex Corporation. We have from time to time purchased equipment
from Terex and may do so in the future. Currently, we have no obligations to
purchase equipment from Terex. The price and other terms of our transactions
with Terex are established through arms' length negotiations between the
parties. In 2000, we purchased from Terex (1) approximately $53 million of
rental equipment, which represented approximately 6.6% of the total dollar
amount of rental equipment purchased by us in 2000, and (2) approximately $17
million of equipment for resale, which represented approximately 9% of the
total dollar amount of equipment for resale purchased by us in 2000.


                                      45



                              SELLING STOCKHOLDER



    The Colburn Music Fund (the "Music Fund"), a nonprofit corporation,
currently owns 12,000,000 shares of our common stock. The Music Fund will sell
9,000,000 of these shares in the offering (10,350,000 shares, if the
underwriters fully exercise the over-allotment option). Following the offering,
the Music Fund will continue to own 3,000,000 shares of our common stock
(1,650,000 shares, if the underwriters fully exercise the over-allotment
option). These shares will be subject to a 270-day lock-up as described under
"Underwriting."


    The Music Fund is affiliated with Richard D. Colburn, a non-officer
director of our company, as described below. Mr. Colburn was formerly Chairman
of U.S. Rentals and became a director of our company in September 1998
following the merger of our company with U.S. Rentals.

    The shares of our common stock that are owned by the Music Fund were
originally issued by us in connection with the merger of our company with U.S.
Rentals. The shares were originally issued to a corporation wholly owned by Mr.
Colburn and were subsequently transferred by this corporation to the Music
Fund.

    Mr. Colburn is a director of the Music Fund and, in that capacity, may
share the power to direct the voting and disposition of the shares of our
common stock held by the Music Fund. Because of this power, Mr. Colburn is
considered to have "beneficial ownership" of these shares, within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934. However, Mr. Colburn
disclaims such beneficial ownership.


    As described above, Mr. Colburn is considered to be the "beneficial owner,"
within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, of
all of the shares being sold by the Music Fund. The table below shows the
aggregate number of shares of common stock that are currently beneficially
owned by Mr. Colburn and the number of shares that he will beneficially own
following the offering. The shares that he will beneficially own following the
offering will be subject to a 270-day lock-up as described under
"Underwriting."





                                                          Shares of Common
                              Shares of Common Stock     Stock Beneficially
                            Beneficially Owned Prior to   Owned After This
                                   This Offering              Offering
                            --------------------------  -------------------
                               Number           Percent  Number      Percent
                             ----------         ------- ---------    -------
                                                         
         Richard D. Colburn  13,451,000(1)       18.4%  4,451,000(2)   6.1%


--------
(1) Consists of (i) 30,000 shares issuable upon exercise of currently
    exercisable options held by Mr. Colburn, (ii) 1,421,000 outstanding shares
    owned by a corporation wholly owned by Mr. Colburn and (iii) 12,000,000
    outstanding shares held by the Music Fund.
(2) Consists of (i) 30,000 shares issuable upon exercise of currently
    exercisable options held by Mr. Colburn, (ii) 1,421,000 outstanding shares
    owned by a corporation wholly owned by Mr. Colburn and (iii) 3,000,000
    outstanding shares held by the Music Fund.

                                      46



                            PRINCIPAL STOCKHOLDERS


Information Concerning Ownership of Common Stock



    The table below and the notes thereto set forth as of August 14, 2001
(unless otherwise indicated in the footnotes), certain information concerning
the beneficial ownership (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of our common stock by (i) each director and executive
officer of our company, (ii) all executive officers and directors of our
company as a group and (iii) each person known to us to be the owner of more
than 5% of our common stock.



    Following the offering, the number of shares beneficially owned by Mr.
Colburn will be reduced as described under "Selling Stockholder." This will
reduce the aggregate number of shares beneficially owned by all executive
officers and directors as a group to 28,672,619 shares, representing 33.4% of
the outstanding common stock.




                                                              Number of
                                                              Shares of      Percent of
                                                             Common Stock      Common
                                                             Beneficially      Stock
Name and Address(1)                                          Owned(2)(3)      Owned(3)
-------------------                                          ------------     --------
                                                                       
Bradley S. Jacobs...........................................  18,166,535(4)     22.1%
Wayland R. Hicks............................................   1,801,944(5)      2.4%
John N. Milne...............................................   3,062,537(6)      4.1%
Michael J. Nolan............................................   1,398,197(7)      1.9%
Leon D. Black...............................................      30,000(8)        *
Richard D. Colburn..........................................  13,451,000(9)     18.4%
Ronald M. DeFeo.............................................      93,000(10)       *
Michael S. Gross............................................      30,000(11)       *
Richard J. Heckmann.........................................     182,800(12)       *
John S. McKinney............................................     955,119(13)     1.3%
Gerald Tsai, Jr.............................................     710,001(14)     1.0%
Timothy J. Tully............................................     105,120(15)       *
Christian M. Weyer..........................................     102,000(16)       *
All executive officers and directors as a group (13 persons)  37,672,619(17)    43.6%
Apollo Investment Fund IV, L.P. and
  Apollo Overseas Partners IV, L.P..........................  15,333,333(18)    17.3%
Wellington Management Company, LLP..........................   4,368,870(19)     6.0%


--------
 *   Less than 1%.
 (1) Unless otherwise indicated, the address is c/o our company at Five
     Greenwich Office Park, Greenwich, CT 06830.
 (2) Unless otherwise indicated, each person has sole investment and voting
     power with respect to the shares indicated. For purposes of this table, a
     person or group of persons is deemed to have "beneficial ownership" of any
     shares as of a given date which such person has the right to acquire
     within 60 days after such date. For purposes of computing the percentage
     of outstanding shares held by each person or group of persons named above
     on a given date, any security which such person or persons has the right
     to acquire within 60 days after such date is deemed to be outstanding for
     the purpose of computing the percentage ownership of such person or
     persons, but is not deemed to be outstanding for the purpose of computing
     the percentage ownership of any other person.
 (3) In certain cases, includes securities owned by one or more entities
     controlled by the named holder.
 (4) Consists of 9,066,534 outstanding shares (including 800,000 shares of
     restricted stock that are subject to vesting), 6,150,001 shares issuable
     upon the exercise of currently exercisable warrants and 2,950,000 shares
     issuable upon the exercise of currently exercisable options.

                                      47



     Mr. Jacobs has certain rights relating to the disposition of the shares
     and warrants owned by certain of the other officers and employees of
     United Rentals as described under "--Certain Agreements Relating to
     Securities Held by Officers." By virtue of such rights, Mr. Jacobs is
     deemed to share beneficial ownership (within the meaning of Rule 13d-3
     under the Securities Exchange Act of 1934) of the shares owned by such
     other officers and employees of United Rentals. The shares that the table
     indicates are owned by Mr. Jacobs include the shares with respect to which
     Mr. Jacobs is deemed to share beneficial ownership as aforesaid. Excluding
     such shares, Mr. Jacobs is deemed the beneficial owner of an aggregate of
     15,143,043 shares of common stock (composed of 7,193,043 outstanding
     shares (including 800,000 shares of restricted stock that are subject to
     vesting), 5,000,000 shares issuable upon the exercise of currently
     exercisable warrants and 2,950,000 shares issuable upon the exercise of
     currently exercisable options).
 (5) Consists of 576,944 outstanding shares (including 500,000 shares of
     restricted stock that are subject to vesting) and 1,225,000 shares
     issuable upon the exercise of currently exercisable options.
 (6) Consists of 1,598,251 outstanding shares (including 470,000 shares of
     restricted stock that are subject to vesting), 714,286 shares issuable
     upon the exercise of currently exercisable warrants and 750,000 shares
     issuable upon the exercise of currently exercisable options.
 (7) Consists of 597,482 outstanding shares (including 235,000 shares of
     restricted stock that are subject to vesting), 285,715 shares issuable
     upon the exercise of currently exercisable warrants and 515,000 shares
     issuable upon the exercise of currently exercisable options.
 (8) Consists of 30,000 shares issuable upon exercise of currently exercisable
     options. Mr. Black disclaims beneficial ownership of certain shares as
     described in footnote 18.
 (9) Consists of (i) 1,421,000 outstanding shares owned by a corporation wholly
     owned by Mr. Colburn, (ii) 30,000 shares issuable upon exercise of
     currently exercisable options held by Mr. Colburn and (iii) 12,000,000
     outstanding shares held by the Music Fund, of which Mr. Colburn is a
     director. As a director of the Music Fund, Mr. Colburn may share the power
     to direct the voting and disposition of the shares held by the Music Fund.
     However, Mr. Colburn disclaims beneficial ownership of such shares.
(10) Consists of 3,000 outstanding shares and 90,000 shares issuable upon the
     exercise of currently exercisable options.
(11) Consists of 30,000 shares issuable upon exercise of currently exercisable
     options. Mr. Gross disclaims beneficial ownership of certain shares as
     described in footnote 18.
(12) Consists of 92,800 outstanding shares and 90,000 shares issuable upon
     exercise of currently exercisable options.
(13) Consists of 962 outstanding shares and 954,157 shares issuable upon the
     exercise of currently exercisable options.
(14) Consists of 270,001 outstanding shares and 440,000 shares issuable upon
     exercise of currently exercisable options.
(15) Consists of 105,120 outstanding shares held by a limited liability company
     of which Mr. Tully serves as managing member. Mr. Tully disclaims
     beneficial ownership of 76,590 of these shares.
(16) Consists of 72,000 outstanding shares and 30,000 shares issuable upon
     exercise of currently exercisable options.
(17) Consists of 24,388,461 outstanding shares, 6,150,001 shares issuable upon
     the exercise of currently exercisable warrants and 7,134,157 shares
     issuable upon the exercise of currently exercisable options.
(18) Consists of 12,000,000 shares issuable upon conversion of outstanding
     shares of our Series A Preferred Stock and 3,333,333 shares issuable upon
     conversion of outstanding shares of our Series B-1 Preferred Stock. Of the
     shares indicated, (i) 13,055,707 shares are owned by Apollo Investment
     Fund IV, L.P. ("AIFIV") and (ii) 2,277,626 shares are owned by Apollo
     Overseas Partners IV, L.P. ("Overseas IV"). Apollo Advisors IV, L.P.
     ("Advisors IV") is the general partner of AIFIV and the managing general
     partner of Overseas IV. Apollo Capital Management IV, L.P. ("Capital
     Management IV") is the general partner of Advisors IV. The directors and
     principal executive officers of Capital Management IV are Leon D. Black
     and John J. Hannan.

                                      48



     Messrs. Black and Hannan are also limited partners of Advisors IV. Messrs.
     Black, Gross and Hannan disclaim beneficial ownership of the shares owned
     by AIFIV and Overseas IV. The address of both AIFIV and Overseas IV is c/o
     Apollo Advisors IV, L.P., Two Manhattanville Road, Purchase, New York
     10577.

(19) The share ownership information for Wellington Management Company, LLP
     ("Wellington") is as of March 31, 2001, and is based on information
     provided by Wellington. Wellington has shared voting power with respect to
     4,076,301 of the indicated shares and has shared dispositive power with
     respect to all of the indicated shares. Such shares are owned by various
     clients of Wellington for whom Wellington serves as investment advisor.



Information Concerning Ownership of Series A Preferred Stock



    There are 300,000 shares of our Series A Preferred stock outstanding. The
holders of the Series A Preferred have certain class voting rights with respect
to the election of directors as described under "Management--Right of Holders
of Series A Preferred to Elect Directors."



    All of the outstanding shares of Series A Preferred are owned by two
affiliated entities: Apollo Investment Fund IV, L.P ("AIFIV"), which holds
11,389,040 shares, and Apollo Overseas Partners IV, LP ("Overseas IV"), which
holds 610,960 shares. Apollo Advisors IV, L.P. ("Advisors IV") is the general
partner of AIFIV and the managing general partner of Overseas IV. Apollo
Capital Management IV, L.P. ("Capital Management IV") is the general partner of
Advisors IV. The directors and principal executive officers of Capital
Management IV are Leon D. Black and John J. Hannan. Messrs. Black and Hannan
are also limited partners of Advisors IV. Messrs. Black and Hannan disclaim
beneficial ownership of the shares owned by AIFIV and Overseas IV. The address
of both AIFIV and Overseas IV is c/o Apollo Advisors IV, L.P., Two
Manhattanville Road, Purchase, New York 10577.


Certain Agreements Relating to Securities Held By Officers

    Prior to our initial public offering, certain executive officers and other
employees of our company purchased our common stock (and in certain cases
warrants) from us in private placements. All shares of our common stock and
warrants purchased by the executive officers and other employees of our company
prior to our initial public offering (and any shares of our common stock
acquired upon exercise of such warrants) are referred to as the "Private
Placement Securities."

    Each holder of Private Placement Securities (other than Mr. Jacobs and Mr.
Hicks) has entered into an agreement with our company and Mr. Jacobs that
provides that (1) if Mr. Jacobs sells any Private Placement Securities that he
beneficially owns in a commercial, non-charitable transaction, then Mr. Jacobs
is required to use his best efforts to sell (and has the right to sell subject
to certain exceptions) on behalf of such holder a pro rata portion of such
holder's Private Placement Securities at the then prevailing prices, and (2)
except for sales that may be required to be made as aforesaid, the holder shall
not (without our prior written consent) sell or otherwise dispose of the
Private Placement Securities owned by such holder (subject to certain
exceptions for charitable gifts). The foregoing provisions of the agreements
terminate, depending on the individual, in either September or October 2002.

    Each holder of Private Placement Securities (other than Mr. Jacobs and Mr.
Hicks) has also agreed pursuant to such agreements that we, in our sole
discretion, may, prior to September 1, 2005, repurchase the Private Placement
Securities owned by such holder in the event that such holder breaches any
agreement with us or acts adversely to the interest of our company. The amount
to be paid by us in the event of a repurchase will be equal to (1) in the case
of Messrs. Milne and Nolan, $9.125 per share of common stock and $0.625 per
warrant plus an amount representing a 4% annual

                                      49



return on such amounts from the date on which such securities were purchased
and (2) in the case of any other holder of Private Placement Securities, the
amount originally paid by such holder for such securities plus an amount
representing a 10% annual return on such amount.

    There are currently approximately 3,023,492 Private Placement Securities
that are subject to the aforementioned agreements (comprised of 1,873,491
outstanding shares and 1,150,001 shares that may be acquired pursuant to
currently exercisable warrants). These securities include the following
securities held by the current executive officers and directors of our company:
John N. Milne (1,068,251 outstanding shares and warrants to purchase 714,286
shares); and Michael J. Nolan (347,382 outstanding shares and warrants to
purchase 285,715 shares).

                                      50



                         DESCRIPTION OF CAPITAL STOCK

General

    Our authorized capital stock consists of 500,000,000 shares of common
stock, par value $0.01 per share, and 5,000,000 shares of preferred stock, par
value $0.01 per share.

    The following description of our capital stock is a summary of the material
terms of such stock. This summary may not contain all the information that is
important to you. The summary is subject in all respects to applicable Delaware
law and to the provisions of our Certificate of Incorporation and By-laws.

Common Stock


    As of August 14, 2001, there were 73,251,558 shares of common stock
outstanding. The holders of shares of common stock are entitled to:


    . one vote per share held on all matters submitted to a vote at a meeting
      of stockholders;

    . do not have cumulative voting rights;

    . do not have preemptive rights;

    . are entitled to receive dividends, if any, that may be declared by the
      board of directors (subject to the rights of preferred stockholders); and

    . upon liquidation, dissolution or winding-up of our business are entitled
      to any assets remaining after we pay our creditors (subject to the rights
      of preferred stockholders).

Preferred Stock

  General

    We are authorized by our certificate of incorporation to issue up to
5,000,000 shares of preferred stock in one or more series. The board of
directors has the authority, without any vote or action by our stockholders, to
(1) authorize the issuance of preferred stock up to the limit set by our
certificate of incorporation, (2) create new series of preferred stock and (3)
fix the terms of each series, including any rights relating to dividends,
voting, conversion, redemption, and liquidation preference. The issuance of
preferred stock could adversely affect the voting and other rights of holders
of the common stock and may have the effect of delaying or preventing a change
in control of our company.

    As of the date of this prospectus, we have designated two series of
preferred stock as described below.

  Series A Perpetual Convertible Preferred Stock


    We have designated 300,000 shares of preferred stock as Series A Perpetual
Convertible Preferred Stock ("Series A Preferred"). A complete description of
the terms of the Series A Preferred is set forth in the Certificate of
Designation therefor as amended (the "Series A Designation"), which is an
exhibit to the Registration Statement of which this prospectus forms a part.
Set forth below is a summary of the material terms of the Series A Preferred,
which summary is qualified in its entirety by reference to the Series A
Designation.


    Ranking. The Series A Preferred ranks (1) senior to the common stock with
respect to distributions upon the liquidation, winding-up or dissolution of
Holdings and (2) the same as the Series B Preferred with respect to such
distributions.

    Liquidation Preference. Upon any voluntary or involuntary liquidation,
dissolution or winding-up of Holdings or reduction or decrease in its capital
stock resulting in a distribution of assets to the holders of any class or
series of Holdings' capital stock, the holders Series A Preferred will be
entitled to payment out of the assets of Holdings available for distribution of
an amount equal to $1,000 per

                                      51



share of Series A Preferred (the "Series A Liquidation Preference"), plus
accrued and unpaid dividends, if any, to the date fixed for liquidation,
dissolution, winding-up or reduction or decrease in capital stock, before any
distribution is made on the common stock. After payment in full of the Series A
Liquidation Preference and such dividends, if any, to which holders of Series A
Preferred are entitled, such holders will not be entitled to any further
participation in any distribution of assets of Holdings.

    Dividends. The Series A Preferred bears no stated dividend. However, in the
event that Holdings declares or pays any dividends or other distributions upon
the common stock, Holdings must (subject to certain exceptions) also declare
and pay to the holders of the Series A Preferred, at the same time that it
declares and pays such dividends or other distributions to the holders of the
common stock, the dividends or distributions which would have been declared and
paid with respect to the common stock issuable upon conversion of the Series A
Preferred had all of the outstanding shares of Series A Preferred been
converted immediately prior to the record date for such dividend or
distribution, or if no record date is fixed, the date as of which the record
holders of common stock entitled to such dividends or distributions are
determined.

    Conversion Rights.  Each share of Series A Preferred is convertible at any
time, at the option of the holder, into 40 shares of common stock (representing
a conversion price of $25 per share of common stock based on the liquidation
preference of $1,000 per share of Series A Preferred). The conversion price is
subject to adjustment in certain events as set forth in the Series A
Designation.

    Voting. Under certain circumstances the holders of the Series A Preferred,
voting separately as a single class, have the right to elect one or two
directors as described under "Management--Right of Holders of Series A
Preferred to Elect Directors."

    Except as described above with respect to the election of directors and
except as otherwise required by applicable law, the holders of Series A
Preferred are entitled to vote together with the holders of the common stock as
a single class on all matters submitted to stockholders of Holdings for a vote.
Each share of Series A Preferred is entitled to one vote for each share of
common stock issuable upon conversion of such share of Series A Preferred.

    In addition, Holdings may not, without the affirmative vote or consent of
the holders of at least a majority of the shares of Series A Preferred then
outstanding voting or consenting as the case may be, as a separate class, take
certain actions specified in the Series A Designation.
    Redemption; Automatic Conversion. If a Change in Control (as defined in the
Series A Designation) with respect to Holdings occurs (or Holdings enters into
a binding agreement relating thereto), the following provisions will apply:

    . If the Change in Control is in connection with an acquisition which is
      not accounted for under the "pooling-of-interests" method of generally
      accepted accounting principles, Holdings must offer to purchase within 10
      business days after the Change in Control all of the then outstanding
      shares of Series A Preferred at a purchase price per share, in cash,
      equal to the Series A Liquidation Preference thereof plus an amount equal
      to 6.25% of the Series A Liquidation Preference, compounded annually from
      January 7, 1999 to the purchase date (the "Series A Call Price").

    . If the Change in Control is an acquisition which is accounted for under
      the "pooling-of-interests" method of accounting, all of the then
      outstanding Series A Preferred will be automatically converted into
      common stock having a market value equal to 109.5% of the Series A Call
      Price, valued at the closing price of the common stock at the close of
      business on the business day prior to the date of the Change in Control.

                                      52



    Redemption Relating to Certain Issuances of Securities. If, after 2 1/2
years following the date of issuance of the Series A Preferred, Holdings issues
for cash common stock or a series of preferred stock convertible into common
stock, in either a public offering or a bona fide private financing, for a
price for the common stock (including any amount payable upon conversion of
such preferred stock) below the then current conversion price of Series A
Preferred into common stock (currently $25 per share) (a "Series A Reduced
Price Offering"), then Holdings must make an offer to purchase the outstanding
shares of Series A Preferred as follows:


    . If the Series A Reduced Price Offering does not trigger an obligation to
      offer to purchase Series B Preferred Stock, Holdings must make an offer
      to apply towards the purchase of outstanding shares of Series A
      Preferred, at the Series A Call Price, 40% of the Specified Amount (as
      hereinafter defined) with respect to such offering. The "Specified
      Amount" with respect to any Series A Reduced Price Offering shall equal
      the amount by which the net cash proceeds from any such Series A Reduced
      Price Offering and for all other Series A Reduced Price Offerings
      consummated during the preceding 12 months (but excluding any Series A
      Reduced Price Offerings prior to June 30, 2001) exceeds an aggregate of
      $50.0 million, less a credit for all amounts theretofore paid for such
      purchases during such 12-month period.



    . If the Series A Reduced Price Offering does trigger an obligation to
      offer to purchase Series B Preferred Stock, then Holdings will be
      required to offer to apply the Call Percentage (as defined below) of the
      Specified Amount towards the purchase of both Series B Preferred and
      Series A Preferred. In such event, the Specified Amount shall be
      allocated to the purchase of Series B Preferred and Series A Preferred in
      proportion to the aggregate liquidation amount of each such series of
      preferred stock (provided that, if the aggregate liquidation amount of
      the Series B Preferred is in excess of $500.0 million, such excess shall
      be ignored in calculating such proportion).


    For purposes of the preceding paragraph, the "Call Percentage" will be a
function of the aggregate liquidation amount of the Series A Preferred and
Series B Preferred as set forth in the following table:



                                                                Call
        Aggregate Liquidation Amount                         Percentage
        ----------------------------                         ----------
                                                          
        up to and including $500 million....................     40%
        more than $500 million to and including $550 million     43%
        more than $550 million to and including $600 million     46%
        more than $600 million to and including $650 million     50%
        more than $650 million to and including $700 million     53%
        more than $700 million to and including $750 million     56%
        more than $750 million..............................     60%


  Series B Perpetual Convertible Preferred Stock


    We have designated 500,000 shares of preferred stock as Series B Perpetual
Convertible Preferred Stock consisting of 450,000 shares designated as Class
B-1 Perpetual Convertible Preferred Stock (the "B-1 Preferred Stock") and
50,000 shares designated as Class B-2 Perpetual Convertible Preferred Stock
(the "B-2 Preferred Stock"). A complete description of the terms of the Series
B Preferred is set forth in the Certificate of Designation therefor (the
"Series B Designation"), which is an exhibit to the Registration Statement of
which this prospectus forms a part. Set forth below is a summary of the
material terms of the Series B Preferred, which summary is qualified in its
entirety by reference to the Series B Designation.


    Except where otherwise indicated, (1) the terms set forth below apply to
both the B-1 Preferred and B-2 Preferred and (2) each reference to the Series B
Preferred includes both the B-1 Preferred and B-2 Preferred.

                                      53



    Ranking. The Series B Preferred ranks (1) senior to the common stock with
respect to distributions upon the liquidation, winding-up or dissolution of
Holdings and (2) the same as the Series A Preferred with respect to such
distributions.

    Liquidation Preference. Upon any voluntary or involuntary liquidation,
dissolution or winding-up of Holdings or reduction or decrease in its capital
stock resulting in a distribution of assets to the holders of any class or
series of Holding's capital stock, the holders of Series B Preferred will be
entitled to payment out of the assets of Holdings available for distribution of
an amount equal to $1,000 per share of Series B Preferred (the "Series B
Liquidation Preference"), plus accrued and unpaid dividends, if any, to the
date fixed for liquidation, dissolution, winding-up or reduction or decrease in
capital stock, before any distribution is made on the common stock. After
payment in full of the Series B Liquidation Preference and such dividends, if
any, to which holders of Series B Preferred are entitled, such holders will not
be entitled to any further participation in any distribution of assets of
Holdings.

    Dividends. The Series B Preferred bears no stated dividend. However, in the
event that Holdings declares or pays any dividends or other distributions upon
the common stock, Holdings must (subject to certain exceptions) also declare
and pay to the holders of the Series B Preferred, at the same time that it
declares and pays such dividends or other distributions to the holders of the
common stock, the dividends or distributions which would have been declared and
paid with respect to the common Stock issuable upon conversion of the Series B
Preferred had all of the outstanding shares of Series B Preferred been
converted immediately prior to the record date for such dividend or
distribution, or if no record date is fixed, the date as of which the record
holders of common stock entitled to such dividends or distributions are
determined.

    Conversion Rights. Each share of Series B Preferred is convertible at any
time, at the option of the holder, into 33 1/3 shares of common stock
(representing a conversion price of $30 per share of common stock based on the
liquidation preference of $1,000 per share of Series B Preferred). The
conversion price is subject to adjustment in certain events as set forth in the
Series B Designation.

    Voting. Except as otherwise required by applicable law, the holders of B-1
Preferred are entitled to vote together with the holders of the common stock as
a single class on all matters submitted to stockholders of Holdings for a vote.
Each share of B-1 Preferred is entitled to one vote for each share of common
stock issuable upon conversion of such share of B-1 Preferred.

    Except as provided in the following paragraph, the holders of the B-2
Preferred are not entitled to vote on any matter to be voted on by stockholders
of Holdings.

    Holdings may not, without the affirmative vote or consent of the holders of
at least a majority of the shares of Series B Preferred then outstanding voting
or consenting as the case may be, as a separate class, take certain actions
specified in the Series B Designation.

    Redemption; Automatic Conversion. If a Change in Control (as defined in the
Series B Designation) with respect to Holdings occurs (or Holdings enters into
a binding agreement relating thereto), the following provisions will apply:

    . If the Change of Control is not in connection with an acquisition that is
      accounted for under the "pooling-of-interests" method of generally
      accepted accounting principles, Holdings must offer to purchase, within
      10 business days after the Change of Control, all of the then outstanding
      shares of Series B Preferred at a purchase price per share, in cash,
      equal to the Series B Liquidation Preference thereof plus an amount equal
      to 6.25% of the Series B Liquidation Preference, compounded annually from
      the date of issuance of such share to the purchase date (the ''Series B
      Call Price").


                                      54



    . If the Change of Control is an acquisition that is accounted for under
      the "pooling-of-interests" method of generally accepted accounting
      principles, then, upon the occurrence of the Change in Control, all of
      the then outstanding Series B Preferred Stock will be automatically
      converted into common stock having a market value equal to 109.5% of the
      Series B Call Price, valued at the closing price of the common stock at
      the close of business on the business day prior to the date of the Change
      in Control.

    Redemption Relating to Certain Issuances of Securities. If, after 2 1/2
years following the date of the issuance of the Series B Preferred, Holdings
issues for cash, common stock or a series of preferred stock convertible into
common stock, in either a public offering or a bona fide private financing, for
a price for the common stock (including any amount payable upon conversion of
preferred stock) below the conversion price then in effect for the Series B
Preferred (each such offering being referred to as a "Series B Reduced Price
Offering"), then Holdings will be required to make an offer to purchase the
outstanding shares of Series B Preferred as follows:


    . If the Series B Reduced Price Offering does not also trigger an
      obligation to offer to repurchase Series A Preferred, then Holdings will
      be required to offer to apply towards the purchase of Series B Preferred
      at the Series B Call Price an amount equal to 40% of the Specified Amount
      (as hereinafter defined) with respect to such offering. The "Specified
      Amount" with respect to any Series B Reduced Price Offering shall equal
      the amount by which the net cash proceeds from such Series B Reduced
      Price Offering and for all other Series B Reduced Price Offerings
      consummated during the preceding 12 months (but excluding any Reduced
      Price Offering prior to December 31, 2001) exceeds an aggregate of $50.0
      million, less a credit for all amounts theretofore paid to the holders of
      the Series A Preferred and the Series B Preferred for such purchases
      during such 12-month period.



    . If the Series B Reduced Price Offering also triggers an obligation to
      offer to purchase Series A Preferred, then Holdings will be required to
      offer to apply the Call Percentage (as defined above with respect to the
      Series A Preferred) of the Specified Amount towards the purchase of both
      Series B Preferred and Series A Preferred. In such event, the Specified
      Amount shall be allocated to the purchase of Series B Preferred and
      Series A Preferred in proportion to the aggregate liquidation amount of
      each such series of preferred stock (provided that, if the aggregate
      liquidation amount of the Series B Preferred is in excess of $500.0
      million, such excess shall be ignored in calculating such proportion).


    Right to Exchange Between Classes of Series B Preferred. Subject to certain
limitations set forth in the Series B Designation, certain holders of shares of
B-2 Preferred shall be entitled, without the payment of any additional
consideration, to convert at any time and from time to time any or all shares
of B-2 Preferred held by such holder into the same number of shares of B-1
Preferred and vice versa.

Warrants, Options and Convertible Securities


    There are currently outstanding warrants to purchase an aggregate of
6,808,581 shares of common stock. Such warrants provides for a weighted average
exercise price of $11.83 per share.



    There are currently outstanding options to purchase an aggregate of
16,546,567 shares of common stock. These options provide for a weighted average
exercise price of $20.29 per share. Of these options, options to purchase an
aggregate of 11,653,181 shares of common stock are currently exercisable and
options to purchase 4,893,386 shares of common stock will become exercisable in
installments over specified periods.


                                      55



    There are currently outstanding convertible notes that, at the option of
the holders thereof, may be converted into an aggregate of 232,586 shares of
common stock. Such notes provides for a weighted average conversion price of
$33.25 per share.


    A subsidiary trust of Holdings has issued $300.0 million of Trust Preferred
Securities. These securities are convertible at the option of the holders
thereof into common stock at a conversion price equivalent to $43.63 per share
(subject to adjustment).


Transfer Agent and Registrar

    American Stock Transfer & Trust Company serves as transfer agent and
registrar for the common stock.

                     CERTAIN CHARTER AND BY-LAW PROVISIONS

    The following brief description of certain provisions our Certificate of
Incorporation (the "Certificate") and By-laws does not purport to be complete
and is subject in all respects to the provisions of the Certificate and
By-laws, copies of which have been filed as exhibits to the Registration
Statement of which this prospectus forms a part.

Classified Board of Directors

    The Certificate provides that the directors (other than directors elected
by holders of preferred stock) shall be divided into three classes and that the
number of directors in each class shall be as nearly equal as is possible based
upon the number of directors constituting the entire board of directors. Each
class is elected to serve a three-year term. The terms of the classes are
staggered so that the term of only one class expires each year.

    The classification of directors has the effect of making it more difficult
for stockholders to change the composition of the board. At least two annual
meetings of stockholders, instead of one, will generally be required to effect
a change in a majority of the board. Such a delay may help ensure that our
directors, if confronted by a third party attempting to force a proxy contest,
a tender or exchange offer or other extraordinary corporate transaction, would
have sufficient time to review the proposal as well as any available
alternatives to the proposal and to act in what they believe to be the best
interests of the stockholders. However, the classification of directors could
also have the effect of discouraging a third party from initiating a proxy
contest, making a tender offer or otherwise attempting to obtain control of the
company, even though such an attempt might be beneficial to the company and its
stockholders. The classification of directors could thus increase the
likelihood that incumbent directors will retain their positions.

Number of Directors; Removal; Filling Vacancies

    The Certificate provides that (subject to any rights of holders of
preferred stock to elect directors) the number of directors comprising the
entire board of directors may not be less than three or more than nine, unless
approved by action of not less than two-thirds of the directors then in office.

    The Certificate also provides that (subject to any rights of holders of
preferred stock) newly created directorships resulting from an increase in the
authorized number of directors or vacancies on the board resulting from death,
resignation, retirement, disqualification or removal of directors or any other
cause may be filled only by the board (and not by the stockholders unless there
are no directors in office), provided that a quorum is then in office and
present, or by a majority of the directors then in

                                      56



office, if less than a quorum is then in office, or by the sole remaining
director. Accordingly, the board could prevent any stockholder from enlarging
the board and filling the new directorships with such stockholder's own
nominees.

    Under the Delaware law, unless otherwise provided in the certificate of
incorporation, directors serving on a classified board may only be removed by
the stockholders for cause. The Certificate provides that directors may be
removed only for cause and only upon the affirmative vote of holders of at
least 66 2/3% of the voting power of all the then outstanding shares of stock
entitled to vote generally in the election of directors, voting together as a
single class.

    The provisions of the Certificate governing the number of directors, their
removal and the filling of vacancies may have the effect of discouraging a
third party from initiating a proxy contest, making a tender offer or otherwise
attempting to gain control of our company, or of attempting to change the
composition or policies of our board, even though such attempts might be
beneficial to our company or our stockholders. These provisions of the
Certificate could thus increase the likelihood that incumbent directors retain
their positions.

Limitation on Special Meetings; No Stockholder Action by Written Consent

    The Certificate and the By-laws provide that (subject to the rights, if
any, of holders of any class or series of Preferred Stock then outstanding) (1)
only a majority of our board of directors or the chief executive officer will
be able to call a special meeting of stockholders; (2) the business permitted
to be conducted at a special meeting of stockholders shall be limited to
matters properly brought before the meeting by or at the direction of our board
of directors; and (3) stockholder action may be taken only at a duly called and
convened annual or special meeting of stockholders and may not be taken by
written consent. These provisions, taken together, prevent stockholders from
forcing consideration by the stockholders of stockholder proposals over the
opposition of our board of directors, except at an annual meeting.

Advance Notice Provisions for Stockholder Nominations and Stockholder Proposals

    The By-laws establish an advance notice procedure for stockholders to make
nominations of candidates for election as director, or to bring other business
before an annual meeting of stockholders of Holdings (the "Stockholder Notice
Procedure").

    The Stockholder Notice Procedure provides that, subject to the rights of
any holders of preferred stock, only persons who are nominated by or at the
direction of our board of directors, any committee appointed by our board, or
by a stockholder who has given timely written notice to the Secretary of our
company prior to the meeting at which directors are to be elected, will be
eligible for election as directors. The Stockholder Notice Procedure provides
that at an annual meeting only such business may be conducted as has been
brought before the meeting by, or at the direction of, our board of directors,
any committee appointed by our board, or by a stockholder who has given timely
written notice to the Secretary of our company of such stockholder's intention
to bring such business before such meeting. Under the Stockholder Notice
Procedure, to be timely, notice of stockholder nominations or proposals to be
made at an annual or special meeting must be received by us not less than 60
days nor more than 90 days prior to the scheduled date of the meeting (or, if
less than 70 days' notice or prior public disclosure of the date of the meeting
is given, then the 15th day following the earlier of (i) the day such notice
was mailed or (ii) the day such public disclosure was made).

    Under the Stockholder Notice Procedure, a stockholder's notice to us
proposing to nominate a person for election as director must contain certain
information about the nominating stockholder and the proposed nominee. Under
the Stockholder Notice Procedure, a stockholder's notice relating to the

                                      57



conduct of business other than the nomination of directors must contain certain
information about such business and about the proposing stockholder. If the
Chairman or other officer presiding at a meeting determines that a person was
not nominated, or other business was not brought before the meeting, in
accordance with the Stockholder Notice Procedure, such person will not be
eligible for election as a director, or such business will not be conducted at
such meeting, as the case may be.

    By requiring advance notice of nominations by stockholders, the Stockholder
Notice Procedure affords our board of directors an opportunity to consider the
qualifications of the proposed nominees and, to the extent deemed necessary or
desirable by the board, to inform stockholders about such qualifications. By
requiring advance notice of other proposed business, the Stockholder Notice
Procedure also provides a more orderly procedure for conducting annual meetings
of stockholders and, to the extent deemed necessary or desirable by our board
of directors, provides the board with an opportunity to inform stockholders,
prior to such meetings, of any business proposed to be conducted at such
meetings, together with any recommendations as to the board's position
regarding action to be taken with respect to such business, so that
stockholders can better decide whether to attend such a meeting or to grant a
proxy regarding the disposition of any such business.

                                      58




MATERIAL U.S. TAX CONSIDERATIONS APPLICABLE TO NON-U.S. HOLDERS OF THE COMMON
                                     STOCK



    The following is a general discussion of the material U.S. federal income
and estate tax consequences of the ownership and disposition of common stock
applicable to Non-U.S. Holders of such common stock who are beneficial owners
of the common stock and who acquire and own such common stock as a capital
asset within the meaning of section 1221 of the Internal Revenue Code of 1986,
as amended (the "Code"). A "Non-U.S. Holder" is any person other than (i) a
citizen or resident of the United States, (ii) a corporation or partnership
created or organized in the United States under the laws of the United States
or of any state, (iii) an estate whose income is includable in gross income for
United States federal income tax purposes regardless of its source, or (iv) a
trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more U.S. persons
have the authority to control all substantial decisions of the trust.


    The discussion does not consider specific facts and circumstances that may
be relevant to a particular Non-U.S. Holder's tax position (including the fact
that in the case of a Non-U.S. Holder that is a partnership, the U.S. tax
consequences of holding and disposing of shares of common stock may be affected
by certain determinations made at the partner level) and does not consider U.S.
state and local or non-U.S. tax consequences. Further, it does not consider
Non-U.S. Holders subject to special tax treatment under the federal income tax
laws (including banks and insurance companies, dealers in securities, and
holders of securities held as part of a "straddle," "hedge," or conversion
transaction). The following discussion is based on provisions of the Code and
administrative and judicial interpretations as of the date hereof, all of which
are subject to change, possibly on a retroactive basis, and any change could
affect the continuing validity of this discussion.


    Each prospective Non-U.S. Holder is urged to consult a tax advisor with
respect to the United States federal tax consequences of holding and disposing
of common stock, as well as any tax consequences that may arise under the laws
of any U.S. state, local or other non-U.S. taxing jurisdiction.


Non-U.S. Holders

    For purposes of the following discussion, dividends and gain on the sale,
exchange or other disposition of common stock will be considered to be "U.S.
trade or business income" if such income or gain is (i) effectively connected
with the conduct of a U.S. trade or business and (ii) in the case of a treaty
resident, attributable to a permanent establishment (or, in the case of an
individual, a fixed base) in the United States.

  Dividends

    In general, dividends paid to a Non-U.S. Holder of common stock will be
subject to withholding of U.S. federal income tax at a 30% rate unless such
rate is reduced by an applicable tax treaty. Dividends that are U.S. trade or
business income, are generally subject to U.S. federal income tax on a net
basis at regular income tax rates, and are not generally subject to the 30%
withholding tax if the Non-U.S. Holder provides a properly executed form W-8ECI
(or successor form) to the payor. Any U.S. trade or business income received by
a Non-U.S. Holder that is a corporation may also, under certain circumstances,
be subject to an additional "branch profits tax" at a 30% rate or such lower
rate as may be applicable under a tax treaty. Under U.S. Treasury Regulations,
a Non-U.S. Holder of common stock who wishes to claim the benefit of an
applicable treaty rate would be required to provide a properly executed Form
W-8 BEN (or successor form) and may be required in certain instances to

                                      59



obtain a U.S. taxpayer identification number which may require the Non-U.S.
Holder to provide certain documentary evidence issued by foreign governmental
authorities as proof of residence in the foreign country.

    A Non-U.S. Holder of common stock that is eligible for a reduced rate of
U.S. withholding tax pursuant to a tax treaty may obtain a refund of any excess
amounts currently withheld by filing an appropriate claim for a refund with the
Internal Revenue Service (the "Service").

Sale, Exchange, Redemption or Other Disposition

    Except as described below and subject to the discussion concerning backup
withholding, any gain realized by a Non-U.S. Holder on the sale, exchange,
redemption or other disposition of common stock generally will not be subject
to U.S. federal income tax, unless (i) such gain is U.S. trade or business
income, (ii) subject to certain exceptions, the Non-U.S. Holder is an
individual who holds the common stock as a capital asset, is present in the
United States for 183 days or more during the taxable year of the disposition,
and certain other conditions are present, (iii) the Non-U.S. Holder is subject
to tax under U.S. tax law provisions applicable to certain U.S. expatriates
(including certain former citizens or residents of the United States) or (iv)
United Rentals is or has been a "United States real property holding
corporation" (a "USRPHC") for federal income tax purposes and such Non-U.S.
Holder has held, directly or constructively, more than 5% of the outstanding
common stock within the five-year period ending on the date of the sale or
exchange. United Rentals believes that it has not been, is not currently, and
is not likely to become, a United States real property holding corporation.
However, no assurance can be given that United Rentals will not be a United
States real property holding corporation when a Non-U.S. Holder sells its
shares of common stock.

Federal Estate Tax

    Common stock owned or treated as owned by an individual who is not a
citizen or resident of the United States for U.S. federal estate tax purposes
will be included in such individual's gross estate for U.S. federal estate tax
purposes unless an applicable estate tax treaty otherwise provides.

Information Reporting and Backup Withholding

    United Rentals must report annually to the Service and to each Non-U.S.
Holder any dividend income that is subject to withholding, or that is exempt
from U.S. withholding tax pursuant to a tax treaty. Copies of these information
returns may also be made available, under the provisions of a specific treaty
or agreement, to the tax authorities of the country in which the Non-U.S.
Holder resides.

    The payment of proceeds from the disposition of common stock to or through
the United States office of any broker, U.S. or foreign, will be subject to
information reporting and possible backup withholding unless the owner
certifies as to its non-U.S. status under penalty of perjury or otherwise
establishes its entitlement to an exemption from information reporting and
backup withholding, provided that the broker does not have actual knowledge
that the holder is a U.S. person or that the conditions of an exemption are
not, in fact, satisfied. The payment of proceeds from the disposition of common
stock to or through a non-U.S. office of a non-U.S. broker that is not a "U.S.
related person" will not be subject to information reporting or backup
withholding. For this purpose, a "U.S. related person" is a foreign person with
one or more of certain enumerated relationships with the United States.

    In the case of the payment of proceeds from the disposition of common stock
to or through a non-U.S. office of a broker that is either a U.S. person or a
U.S. related person, the regulations
require information reporting on the payment unless the broker has documentary
evidence in its files that the owner is a Non-U.S. Holder and the broker has no
knowledge to the contrary. Backup

                                      60



withholding will not apply to payments made through the foreign office of a
broker that is not a U.S. person or a U.S. related person (absent actual
knowledge that the payee is a U.S. person).

    Any amounts withheld under the backup withholding rules from a payment of a
Non-U.S. Holder will be allowed as a refund or a credit against such Non-U.S.
Holder's U.S. federal income tax liability provided the requisite procedures
are followed.


                                      61



                                 UNDERWRITING


    The selling stockholder and the underwriters for the offering (the
"Underwriters") named below have entered into an underwriting agreement with
respect to the shares being offered. Subject to certain conditions, each
Underwriter has severally agreed to purchase the number of shares indicated in
the following table. Goldman, Sachs & Co., Credit Suisse First Boston
Corporation and J.P. Morgan Securities Inc. are the representatives of the
Underwriters.




                         Underwriters              Number of Shares
                         ------------              ----------------
                                                
            Goldman, Sachs & Co...................
            Credit Suisse First Boston Corporation
            J.P. Morgan Securities Inc............
            Deutsche Banc Alex. Brown Inc.  ......
            Legg Mason Wood Walker, Incorporated..
                                                      ---------
               Total..............................    9,000,000
                                                      =========


    If the Underwriters sell more shares than the total number set forth in the
table above, the Underwriters have an option to buy up to an additional
1,350,000 shares from the selling stockholder to cover such sales. They may
exercise that option for 30 days. If any shares are purchased pursuant to this
option, the Underwriters will severally purchase shares in approximately the
same proportion as set forth in the table above.

    The following table shows the per share and total underwriting discounts
and commissions to be paid to the Underwriters by the selling stockholder. Such
amounts are shown assuming both no exercise and full exercise of the
Underwriters' option to purchase 1,350,000 additional shares.



           Paid by the Selling Stockholder No Exercise Full Exercise
           ------------------------------- ----------- -------------
                                                 
                      Per Share...........      $            $
                      Total...............      $            $


    Shares sold by the Underwriters to the public will initially be offered at
the initial price to public set forth on the cover of this prospectus. Any
shares sold by the Underwriters to securities dealers may be sold at a discount
of up to $   per share from the initial price to public. Any such securities
dealers may resell any shares purchased from the Underwriters to certain other
brokers or dealers at a discount of up to $   per share from the initial price
to public. If all the shares are not sold at the initial price to public, the
representatives may change the offering price and the other selling terms.

    The selling stockholder, Richard D. Colburn and Ayr, Inc. (an affiliate of
Mr. Colburn) have agreed that until 270 days after the date of this prospectus
neither they nor any of their affiliates will, without the prior written
consent of Goldman, Sachs & Co., dispose of or hedge any of their shares of
common stock or securities convertible into or exchangeable for shares of
common stock. Subject to certain conditions, the foregoing agreement does not
limit transfers (a) upon the consummation of any merger or reorganization of
United Rentals in which the surviving entity is not controlled by the persons
who controlled United Rentals before such consummation, (b) to one or more
affiliates or one or more members of Mr. Colburn's family, or a trust,
corporation, partnership or limited liability company, the sole beneficiaries
of which are members of Mr. Colburn's family, or (c) to one or more charitable
organizations. In the case of any transfer pursuant to clause (b) or (c) of the
preceding sentence, the transferee is required to agree in writing to be bound
by the terms of the foregoing lock-up, except that charitable organizations
which receive shares under clause (c) may after completion of the offering sell

                                      62



such shares pursuant to Rule 144 so long as no individual charitable
organization sells more than 25,000 of such shares under Rule 144 and so long
as all such charitable organizations together sell no more than 100,000 of such
shares under Rule 144.

    United Rentals and all of our executive officers and directors (other than
Mr. Colburn, who entered into the lock-up described in the preceding paragraph)
have agreed that until 90 days after the date of this prospectus they will not
dispose of or hedge any of their shares of our common stock or securities
convertible into or exchangeable for shares of our common stock, without the
prior written consent of Goldman, Sachs & Co. The foregoing agreement will not
limit a stockholder's ability to transfer shares in a private placement or to
pledge shares, provided that the transferee or pledgee agrees to be bound by
such agreement. The foregoing agreement also will not limit our ability to (a)
make equity or equity-based awards pursuant to existing compensation plans, (b)
issue shares upon exercise or conversion of outstanding options, warrants and
convertible securities, (c) issue shares, warrants or convertible securities as
consideration for acquisitions, provided that the number of shares, warrants or
convertible securities (calculated on a common stock equivalent basis in the
case of warrants and convertible securities) that may be issued as
consideration for acquisitions may not exceed 5,000,000 unless the recipients
of such excess shares, warrants or convertible securities agree with us (which
agreement may not be amended without the prior written consent of Goldman,
Sachs & Co.) to be subject to the foregoing lock-up agreement with respect to
such excess shares, warrants or convertible securities or (d) issue shares upon
the exercise of any warrants or convertible securities issued pursuant to the
preceding clause, provided that such shares will be subject to the foregoing
lock-up to the same extent, if any, as the warrants or convertible securities
pursuant to which such shares were issued.

    Our common stock is listed on the NYSE under the symbol "URI."

    In connection with the offering, the Underwriters may purchase and sell
shares of common stock in the open market. These transactions may include short
sales, stabilizing transactions and purchases to cover positions created by
short sales. Short sales involve the sale by the Underwriters of a greater
number of shares than they are required to purchase in the offering. "Covered"
short sales are sales made in an amount not greater than the Underwriters'
option to purchase additional shares from the selling stockholder in the
offering. The Underwriters may close out any covered short position by either
exercising their option to purchase additional shares or purchasing shares in
the open market. In determining the source of shares to close out the covered
short position, the Underwriters will consider, among other things, the price
of shares available for purchase in the open market as compared to the price at
which they may purchase shares through the overallotment option. "Naked" short
sales are any sales in excess of such option. The Underwriters must close out
any naked short position by purchasing shares in the open market. A naked short
position is more likely to be created if the Underwriters are concerned that
there may be downward pressure on the price of the common stock in the open
market after pricing that could adversely affect investors who purchase in the
offering. Stabilizing transactions consist of various bids for or purchases of
common stock made by the Underwriters in the open market prior to the
completion of the offering.

    The Underwriters also may impose a penalty bid. This occurs when a
particular Underwriter repays to the Underwriters a portion of the underwriting
discount received by it because the representatives have repurchased shares
sold by or for the account of such Underwriter in stabilizing or short covering
transactions.

    Purchases to cover a short position and stabilizing transactions may have
the effect of preventing or retarding a decline in the market price of the
common stock, and together with the imposition of the penalty bid, may
stabilize, maintain or otherwise affect the market price of the common stock.
As a result, the price of the common stock may be higher than the price that
otherwise might exist in the

                                      63



open market. If these activities are commenced, they may be discontinued at any
time. These transactions may be effected on the NYSE, in the over-the-counter
market or otherwise.


    A prospectus in electronic format will be made available on the websites
maintained by one or more of the representatives of the Underwriters of this
offering and may also be made available on websites maintained by other
Underwriters. The representatives may agree to allocate a number of shares to
Underwriters for sale to their online brokerage account holders. Internet
distributions will be allocated by the representatives to Underwriters that may
make Internet distributions on the same basis as other allocations.


    United Rentals estimates that the total expenses of this offering,
excluding underwriting discounts and commissions, will be approximately
$800,000. United Rentals and the selling stockholder will pay all such
expenses, other than certain travel-related expenses.


    Each of the Underwriters has from time to time provided, and may in the
future provide, financial advisory, investment banking and general financing
and banking services to United Rentals and its affiliates, for which such
Underwriter has received or may receive customary fees and commissions.
Affiliates of Goldman, Sachs & Co., Credit Suisse First Boston Corporation,
J.P. Morgan Securities Inc. and Deutsche Banc Alex. Brown Inc. are lenders
under our credit facility.


    United Rentals, the selling stockholder and Richard D. Colburn have agreed
to indemnify the several Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933.

                                      64



                                 LEGAL MATTERS


    The validity of the shares offered will be passed upon for us by Weil,
Gotshal & Manges LLP and Ehrenreich Eilenberg & Krause LLP. Cravath, Swaine &
Moore has represented the underwriters in connection with this offering.


                                    EXPERTS
    Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements at December 31, 2000 and 1999, and for each of the three
years in the period ended December 31, 2000, as set forth in their report. We
have included our financial statements in the prospectus and elsewhere in the
registration statement in reliance on Ernst & Young LLP's report, given on
their authority as experts in accounting and auditing.


                                      65



                         INDEX TO FINANCIAL STATEMENTS




                                                                                             Page
                                                                                             -----
                                                                                          
I: Unaudited Consolidated Financial Statements of United Rentals, Inc.
       Consolidated Balance Sheets--June 30, 2001 (unaudited) and December 31, 2000.........   F-2
       Consolidated Statements of Operations for the six months ended June 30, 2001 and
         2000 (unaudited)...................................................................   F-3
       Consolidated Statement of Stockholders' Equity for the six months ended June 30,
         2001 (unaudited)...................................................................   F-4
       Consolidated Statements of Cash Flows for the six months ended June 30, 2001 and
         2000 (unaudited)...................................................................   F-5
       Notes to Unaudited Consolidated Financial Statements.................................   F-6
II:  Consolidated Financial Statements of United Rentals, Inc.
       Report of Independent Auditors.......................................................  F-18
       Consolidated Balance Sheets--December 31, 2000 and 1999..............................  F-19
       Consolidated Statements of Operations for the years ended December 31, 2000,
         1999 and 1998......................................................................  F-20
       Consolidated Statements of Stockholders' Equity for the years ended December 31,
         2000, 1999 and 1998................................................................  F-21
       Consolidated Statements of Cash Flows for the years ended to December 31, 2000,
         1999 and 1998......................................................................  F-22
       Notes to Consolidated Financial Statements...........................................  F-24



                                      F-1




                             UNITED RENTALS, INC.



                          CONSOLIDATED BALANCE SHEETS


                                  (Unaudited)





                                                                        June 30,          December 31,
                                                                          2001               2000
                                                                       ----------         ----------
                                                                       (In thousands, except share data)
                                                                                   
ASSETS
Cash and cash equivalents............................................. $   36,135         $   34,384
Accounts receivable, net of allowance for doubtful accounts of $49,693
  in 2001 and $55,624 in 2000.........................................    490,555            469,594
Inventory.............................................................    114,570            133,380
Prepaid expenses and other assets.....................................    183,885            104,493
Rental equipment, net.................................................  1,851,404          1,732,835
Property and equipment, net...........................................    428,576            422,239
Goodwill, net of accumulated amortization of $131,975 in 2001 and
  $103,219 in 2000....................................................  2,199,876          2,215,532
Other intangible assets, net..........................................      9,645             11,476
                                                                       ----------         ----------
                                                                       $5,314,646         $5,123,933
                                                                       ==========         ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
   Accounts payable................................................... $  312,014         $  260,155
   Debt...............................................................  2,759,748          2,675,367
   Deferred taxes.....................................................    230,106            206,243
   Accrued expenses and other liabilities.............................    172,013            136,225
                                                                       ----------         ----------
       Total liabilities..............................................  3,473,881          3,277,990
Commitments and contingencies
Company-obligated mandatorily redeemable convertible preferred
  securities of a subsidiary trust....................................    300,000            300,000
Stockholders' equity:
   Preferred stock--$.01 par value, 5,000,000 shares authorized:
     Series A perpetual convertible preferred stock--
       $300,000 liquidation preference, 300,000 shares issued
       and outstanding................................................          3                  3
     Series B perpetual convertible preferred stock--
       $150,000 liquidation preference, 150,000 shares issued
       and outstanding................................................          2                  2
   Common stock--$.01 par value, 500,000,000 shares authorized,
     73,150,359 shares issued and outstanding in 2001 and
     71,065,707 in 2000...............................................        732                711
   Additional paid-in capital.........................................  1,241,127          1,196,324
   Deferred compensation..............................................    (59,255)
   Retained earnings..................................................    372,880            355,850
   Accumulated other comprehensive loss...............................    (14,724)            (6,947)
                                                                       ----------         ----------
       Total stockholders' equity.....................................  1,540,765          1,545,943
                                                                       ----------         ----------
                                                                       $5,314,646         $5,123,933
                                                                       ==========         ==========





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


                                      F-2




                             UNITED RENTALS, INC.



                     CONSOLIDATED STATEMENTS OF OPERATIONS


                                  (Unaudited)





                                                                          Six Months Ended
                                                                              June 30,
                                                                       ---------------------
                                                                          2001       2000
                                                                       ---------- ----------
                                                                       (In thousands, except
                                                                          per share data)
                                                                            
Revenues:
Equipment rentals..................................................... $1,043,750 $  911,632
   Sales of rental equipment..........................................     72,239    155,171
   Sales of equipment and merchandise and other revenues..............    271,128    242,105

                                                                       ---------- ----------
Total revenues........................................................  1,387,117  1,308,908
Cost of revenues:
   Cost of equipment rentals, excluding depreciation..................    500,136    396,614
   Depreciation of rental equipment...................................    158,354    159,035
   Cost of rental equipment sales.....................................     42,381     91,168
   Cost of equipment and merchandise sales and other operating costs..    197,616    184,309

                                                                       ---------- ----------
Total cost of revenues................................................    898,487    831,126

                                                                       ---------- ----------
Gross profit..........................................................    488,630    477,782
Selling, general and administrative expenses..........................    221,715    210,969
Restructuring charge..................................................     28,922
Non-rental depreciation and amortization..............................     53,238     40,721
                                                                       ---------- ----------
Operating income......................................................    184,755    226,092
Interest expense......................................................    114,589    106,210
Preferred dividends of a subsidiary trust.............................      9,750      9,750
Other (income) expense, net...........................................      6,935       (312)
                                                                       ---------- ----------
Income before provision for income taxes and extraordinary item.......     53,481    110,444
Provision for income taxes............................................     25,134     45,834
                                                                       ---------- ----------
Income before extraordinary item......................................     28,347     64,610
Extraordinary item, net of tax benefit of $6,759......................     11,317
                                                                       ---------- ----------
Net income............................................................ $   17,030 $   64,610
                                                                       ========== ==========
Earnings per share--basic:
   Income before extraordinary item................................... $     0.40 $     0.90
   Extraordinary item, net............................................       0.16

                                                                       ---------- ----------
Net income............................................................ $     0.24 $     0.90

                                                                       ========== ==========
Earnings per share--diluted:
   Income before extraordinary item................................... $     0.31 $     0.70
   Extraordinary item, net............................................       0.13

                                                                       ---------- ----------
   Net income......................................................... $     0.18 $     0.70

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





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


                                      F-3




                             UNITED RENTALS, INC.



                CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY


                                  (Unaudited)





                          Series A        Series B
                          Perpetual       Perpetual
                         Convertible     Convertible                                                              Accumu-
                       Preferred Stock Preferred Stock    Common Stock                                             lated
                       --------------- --------------- -----------------                                           Other
                        Number          Number                            Additional  Deferred           Compre-  Compre-
                          of              of            Number             Paid-in    Compen-   Retained hensive  hensive
                        Shares  Amount  Shares  Amount of Shares   Amount  Capital     sation   Earnings Income    Loss
                       -------  ------ -------  ------ ----------  ------ ----------  --------  -------- -------  --------
                                                   (In thousands, except share data)
                                                                                 
Balance, December
 31, 2000............. 300,000    $3   150,000    $2   71,065,707   $711  $1,196,324            $355,850          $ (6,947)
Comprehensive
 income:
 Net income...........                                                                            17,030 $17,030
 Other comprehensive
  income:
   Foreign currency
    translation
    adjustments.......                                                                                    (3,448)   (3,448)
   Cumulative effect
    on equity of
    adopting FAS
    133, net of tax
    of $1,784.........                                                                                    (2,516)   (2,516)
   Derivatives
    qualifying as
    hedges, net of
    tax of $1,287.....                                                                                    (1,813)   (1,813)

                                                                                                         -------
Comprehensive
 income...............                                                                                   $ 9,253

                                                                                                         =======
Issuance of common
 stock under
 deferred
 compensation
 plans................                                  2,767,041     28      60,621  $(60,649)
Amortization of
 deferred
 compensation.........                                                                   1,394
Issuance of common
 stock................                                      2,770                 50
Exercise of common
 stock options........                                    665,441      7       8,876
Shares repurchased
 and retired..........                                 (1,350,600)   (14)    (24,744)

                       -------    --   -------    --   ----------   ----  ----------  --------  --------          --------
Balance, June 30,
 2001................. 300,000    $3   150,000    $2   73,150,359   $732  $1,241,127  $(59,255) $372,880          $(14,724)

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





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



                                      F-4




                             UNITED RENTALS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)




                                                                                                      Six Months Ended
                                                                                                          June 30,
                                                                                                   ----------------------
                                                                                                      2001        2000
                                                                                                   -----------  ---------
                                                                                                       (In thousands)
                                                                                                          
Cash Flows From Operating Activities:
Net income........................................................................................ $    17,030  $  64,610
Adjustments to reconcile net income to net cash provided by operating activities:
 Depreciation and amortization....................................................................     211,592    199,756
 Gain on sales of rental equipment................................................................     (29,858)   (64,003)
 Deferred taxes...................................................................................      17,427     14,571
 Amortization of deferred compensation............................................................       1,394
 Extraordinary item...............................................................................      18,076
 Restructuring charge.............................................................................      10,893
 Changes in operating assets and liabilities:
   Accounts receivable............................................................................     (20,853)   (31,981)
   Inventory......................................................................................      19,355    (13,616)
   Prepaid expenses and other assets..............................................................     (50,663)    (1,430)
   Accounts payable...............................................................................      51,567    137,285
   Accrued expenses and other liabilities.........................................................      52,495    (42,367)

                                                                                                   -----------  ---------
        Net cash provided by operating activities.................................................     298,455    262,825
Cash Flows From Investing Activities:
Purchases of rental equipment.....................................................................    (303,281)  (513,817)
Purchases of property and equipment...............................................................     (31,426)   (69,241)
Proceeds from sales of rental equipment...........................................................      72,239    155,171
In-process acquisition costs......................................................................      (2,140)    (2,445)
Payments of contingent purchase price.............................................................                 (6,553)
Purchases of other companies......................................................................     (37,801)  (265,084)

                                                                                                   -----------  ---------
        Net cash used in investing activities.....................................................    (302,409)  (701,969)
Cash Flows From Financing Activities:
Proceeds from debt................................................................................   1,979,155    376,903
Payments of debt..................................................................................  (1,926,282)   (38,217)
Proceeds from sale-leaseback......................................................................                147,515
Payments of financing costs.......................................................................     (27,118)    (7,164)
Proceeds from the exercise of common stock options................................................       8,156         96
Shares repurchased and retired....................................................................     (24,758)   (30,950)

                                                                                                   -----------  ---------
        Net cash provided by financing activities.................................................       9,153    448,183
Effect of foreign exchange rates..................................................................      (3,448)       342

                                                                                                   -----------  ---------
Net increase in cash and cash equivalents.........................................................       1,751      9,381
Cash and cash equivalents at beginning of period..................................................      34,384     23,811

                                                                                                   -----------  ---------
Cash and cash equivalents at end of period........................................................ $    36,135  $  33,192
                                                                                                   ===========  =========

Supplemental disclosure of cash flow information:
Cash paid for interest............................................................................ $   110,023  $ 101,046
Cash paid for income taxes, net of refunds........................................................ $       719  $  62,720

Supplemental disclosure of non-cash investing and financing activities:
The Company acquired the net assets and assumed certain liabilities of other companies as follows:
   Assets, net of cash acquired................................................................... $     5,457  $ 392,873
   Liabilities assumed............................................................................      (1,036)  (102,592)
   Less:
      Amounts paid through issuance of debt.......................................................        (600)   (25,197)

                                                                                                   -----------  ---------
                                                                                                         3,821    265,084
   Due to seller and other payments...............................................................      33,980

                                                                                                   -----------  ---------
        Net cash paid............................................................................. $    37,801  $ 265,084
                                                                                                   ===========  =========



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

                                      F-5




                             UNITED RENTALS, INC.



             NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



1. Basis of Presentation



General



    United Rentals, Inc., is principally a holding company ("Holdings" or the
"Company") and conducts its operations primarily through its wholly owned
subsidiary United Rentals (North America), Inc. ("URI") and subsidiaries of
URI. Separate footnote information is not presented for the financial
statements of URI and subsidiaries as that information is substantially
equivalent to that presented below. Earnings per share data is not provided for
the operating results of URI and its subsidiaries as they are wholly owned
subsidiaries of Holdings.



    The Consolidated Financial Statements of the Company included herein are
unaudited and, in the opinion of management, such financial statements reflect
all adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the results of the interim periods presented. Interim financial
statements do not require all disclosures normally presented in year-end
financial statements, and, accordingly, certain disclosures have been omitted.
Results of operations for the six and three month periods ended June 30, 2001
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2001. The Consolidated Financial Statements included herein
should be read in conjunction with the Company's Consolidated Financial
Statements and related Notes thereto included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2000.



Impact of Recently Issued Accounting Standards



    In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities--a
replacement of FASB Statement No. 125." This standard revises the standards for
accounting for securitizations and other transfers of financial assets and
collateral and requires certain disclosures. This standard is effective for
transfers and servicing of financial assets and extinguishments of liabilities
occurring after March 31, 2001 and for disclosures relating to securitization
transactions and collateral for fiscal years ending after December 15, 2000.
The adoption of SFAS No. 140 did not have a material effect on the Company's
consolidated financial position or results of operations.



    In June 2001, the FASB issued SFAS No. 141, "Business Combinations." This
standard addresses financial accounting and reporting for business combinations
and supersedes APB Opinion No. 16, "Business Combinations" and SFAS No. 38,
"Accounting for Preacquisition Contingencies of Purchased Enterprises." All
business combinations in the scope of this Statement are to be accounted for
using one method, the purchase method. This standard is effective for all
business combinations inititated after June 30, 2001.



    In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets." This standard addresses financial accounting and reporting for
acquired goodwill and other intangible assets and supersedes APB Opinion No.
17, "Intangible Assets." This standard is effective for fiscal years beginning
after December 15, 2001. However, this standard is immediately effective in
cases where goodwill and intangible assets are acquired after June 30, 2001.
Under this standard, goodwill and intangible assets deemed to have indefinite
lives will no longer be amortized but will be subject to annual impairment
tests. The Company is currently evaluating the impact SFAS No. 142 will have on
its financial statements and will perform a fair value analysis of its goodwill
in connection with the adoption of this standard on January 1, 2002.



Reclassifications



    Certain prior year balances have been reclassified to conform to the 2001
presentation.


                                      F-6



                             UNITED RENTALS, INC.

       NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)



2. Acquisitions



    During the six months ended June 30, 2001 and the year ended December 31,
2000, the Company completed two acquisitions and 53 acquisitions, respectively,
that were accounted for as purchases. The results of operations of the
businesses acquired in these acquisitions have been included in the Company's
results of operations from their respective acquisition dates.



    The purchase prices for such acquisitions have been allocated to the assets
acquired and liabilities assumed based on their respective fair values at their
respective acquisition dates. However, the Company has not completed its
valuation of all of its purchases and, accordingly, the purchase price
allocations are subject to change when additional information concerning asset
and liability valuations are completed. The preliminary purchase price
allocations that are subject to change primarily consists of rental and
non-rental equipment valuations. These allocations are finalized within 12
months of the acquisition date and are not expected to result in significant
differences between the preliminary and final allocations.



    The following table summarizes, on an unaudited pro forma basis, the
results of operations of the Company for the six months ended June 30, 2000 as
though each acquisition which was consummated during the period January 1, 2000
to June 30, 2001 as mentioned above and in Note 3 to the Notes to Consolidated
Financial Statements included in the Company's 2000 Annual Report on Form 10-K
was made on January 1, 2000 (in thousands, except per share data):




                        
Revenues.................. $1,455,247
Net income................ $   71,418
Basic earnings per share.. $     0.98
Diluted earnings per share $     0.77




    Since the acquisitions made during the six months ended June 30, 2001 had
an insignificant impact on the Company's pro forma results of operations, the
pro forma results of operations for the six months ended June 30, 2001 are not
shown.



    The unaudited pro forma results are based upon certain assumptions and
estimates, which are subject to change. These results are not necessarily
indicative of the actual results of operations that might have occurred, nor
are they necessarily indicative of expected results in the future.



3. Restructuring Charge



    During the second quarter of 2001, the Company recorded a restructuring
charge of approximately $28.9 million. The charge primarily relates to the
closure or consolidation of underperforming branches and administrative
offices, a reduction in the Company's workforce, and certain information
technology project costs. Approximately $10.9 million of the charge is
non-cash. Approximately $3.2 million has been paid during the second quarter of
2001. Of the remaining $14.8 million of this charge, approximately $8.6 million
will be paid by December 31, 2001 and approximately $6.2 million will be paid
in future periods.



    Components of the restructuring charge are as follows:






                                                             Balance
                                   Restructuring Activity in June 30,
                                      Charg-e       2001       2001
                                   ------------- ----------- --------
                                                    
   Costs to vacate facilities.....    $18,291      $ 9,779   $ 8,512
   Workforce reduction costs......      5,666        1,296     4,370
   Information technology costs...      4,965        3,042     1,923
                                      -------      -------   -------
                                      $28,922      $14,117   $14,805
                                      =======      =======   =======



                                      F-7



                             UNITED RENTALS, INC.

       NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)



    Under the restructuring plan, 31 underperforming branches and five
administrative offices will be closed or consolidated, the Company's workforce
will be reduced by 489 employees, and certain information technology hardware
and software will no longer be used. The workforce reduction costs primarily
represent severance. The costs to vacate facilities primarily represent the
payment of obligations under leases, offset by estimated sublease
opportunities, the write-off of capital improvements made to such facilities
and the write-off of related goodwill. As of June 30, 2001, 18 of the 31
underperforming branches have been closed or consolidated and the remaining 13
underperforming branches will be closed or consolidated by December 31, 2001.



4. Refinancing of Debt



    In April 2001, URI issued $450.0 million aggregate principal amount of 10
3/4% senior notes. Concurrent with the issuance of the senior notes, URI
entered into a new senior secured credit facility. The new credit facility is
comprised of a $750.0 million term loan and a $750.0 million revolving credit
facility. The proceeds from the new senior notes and new senior secured credit
facility were used to refinance outstanding secured indebtedness of
approximately $1,664.5 million and obligations under a synthetic lease of $31.2
million. As a result of the refinancing, the Company recorded an extraordinary
charge of approximately $18.1 million ($11.3 million, net of tax), primarily
related to the write-off of financing fees, and a charge of approximately $7.8
million recorded in other (income) expense, net related to refinancing costs of
the synthetic lease.



    10 3/4% Senior Notes. On April 20, 2001, URI sold $450.0 million aggregate
principal amount of 10 3/4% Senior Notes Due 2008. The net proceeds from the
sale of the notes were approximately $439.9 million (after deducting the
initial purchasers' discount and offering expenses). The notes mature on April
15, 2008. The notes are unsecured and are guaranteed by Holdings and by URI's
domestic subsidiaries. URI may, at its option, redeem the notes on or after
April 15, 2005, at specified redemption prices which range from 105.375% in
2005 to 100.0% in 2007 and thereafter. In addition, on or prior to April 15,
2004, URI may, at its option, use the proceeds of a public equity offering to
redeem up to 35% of the outstanding notes, at a redemption price of 110.75%.
The indenture governing the notes contains certain restrictive covenants,
including limitations on (i) additional indebtedness, (ii) restricted payments,
(iii) liens, (iv) dividends and other payments, (v) preferred stock of certain
subsidiaries, (vi) transactions with affiliates, (vii) the disposition of
proceeds of asset sales and (viii) the Company's ability to consolidate, merge
or sell all or substantially all of its assets.



    New Revolving Credit Facility. The revolving credit facility enables URI to
borrow up to $750.0 million on a revolving basis and enables one of its
Canadian subsidiaries to borrow up to $40.0 million (provided that the
aggregate borrowings of URI and the Canadian subsidiary may not exceed $750.0
million). Up to $100.0 million of the revolving credit facility is available in
the form of letters of credit. The revolving credit facility will mature and
terminate on October 20, 2006.



    Borrowings under the revolving credit facility will until October 20, 2001,
accrue interest, at our option, at either (A) the ABR Rate (which is equal to
the greater of (i) the Federal Funds Rate plus 0.5% or (ii) the Chase Manhattan
Bank's prime rate) plus a margin of 1.00% or (B) an adjusted LIBOR rate plus a
margin of 2.0%. From and after October 20, 2001, the above interest rate
margins will be adjusted quarterly based on our funded debt to cash flow ratio,
up to maximum margins of 1.75% and 2.75%, for revolving loans based on the ABR
rate and the adjusted LIBOR rate, respectively, and down to minimum margins of
0.75% and 1.75%, for revolving loans based on the ABR rate and the adjusted
LIBOR rate, respectively.-


                                      F-8



                             UNITED RENTALS, INC.

       NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)





    If at any time an event of default exists, the interest rate applicable to
each loan will increase by 2% per annum.



    URI is also required to pay the lenders a commitment fee equal to 0.5% per
annum in respect of undrawn commitments under the revolving credit facility.



    New Term Loan. On April 20, 2001, URI obtained a $750.0 million term loan.
Amounts repaid in respect of the term loan may not be reborrowed. URI must
repay the principal of the term loan in installments, over six and one-half
years, as follows: (i) on June 30, 2001 and on the last day of each calendar
quarter thereafter up to and including September 30, 2006, URI must repay $1.9
million and (ii) on the last day of each calendar quarter thereafter through
June 30, 2007 and on August 31, 2007, URI must repay $177.2 million.



    Borrowings under the term loan accrue interest, at URI's option, at either
(a) the ABR rate (which is equal to the greater of (i) the Federal Funds Rate
plus 0.5% or (ii) the Chase Manhattan Bank's prime rate) plus a margin of 2.0%,
or (b) an adjusted LIBOR rate plus a margin of 3.0%.



    Covenants. The agreement governing the new senior secured credit facility
contains certain covenants that requires the Company to, among other things,
satisfy certain financial tests relating to: (a) the ratio of senior debt to
cash flow, (b) minimum interest coverage ratio, (c) the ratio of funded debt to
cash flow, and (d) the ratio of senior debt to tangible assets. This agreement
also contains various other covenants that restrict the Company's ability to,
among other things, (i) incur additional indebtedness, (ii) permit liens to
attach to its assets, (iii) pay dividends or make other restricted payments on
its common stock and certain other securities and (iv) make acquisitions unless
certain financial conditions are satisfied.



    Security and Guarantees. URI's obligations under the new senior secured
facility are, subject to limited exceptions, (i) guaranteed by Holdings and
URI's United States subsidiaries and (ii) secured by substantially all of the
assets of URI and its United States subsidiaries, the stock of URI and the
stock of Holdings' other United States subsidiaries and a portion of the stock
of Holdings' Canadian subsidiaries. The obligations of the Canadian subsidiary
that may borrow under the revolving credit facility are guaranteed by URI and
the Company's other Canadian subsidiaries and secured by substantially all of
the assets of this Canadian subsidiary and the stock of its subsidiaries.



5. Receivables Securitization



    During the quarter ended June 30, 2001, the Company obtained an additional
$112.0 million in cash through the securitization of certain of its accounts
receivable through its existing $250.0 million receivable securitization
facility. In the securitization transactions, the Company transferred accounts
receivable to a special purpose vehicle (the "SPV"), which in turn pledged
those receivables to secure borrowings that the SPV incurred to finance its
acquisition of those receivables. The borrowings generally accrue interest at
the blended commercial paper rate for commercial paper issued by Gramercy
Capital Corporation to fund such borrowings plus a margin of 0.75% per annum.
The SPV's borrowings are an obligation of the SPV and not of the Company or
URI, and the lenders' recourse in respect of the borrowings is generally
limited to collections that the SPV receives on the receivables. Collections on
the receivables are used to service the borrowings. From time to time prior to
June


                                      F-9



                             UNITED RENTALS, INC.

       NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

2002, subject to certain conditions, collections from the receivables may be
reinvested by the SPV in additional accounts receivable originated by the
Company. Subject to certain conditions, the term of the receivables
securitization may be extended until December 2003. As of June 30, 2001,
approximately $212.0 million of borrowings was outstanding under the
receivables securitization facility.

6. Earnings Per Share

    The following table sets forth the computation of basic and diluted
earnings per share (in thousands, except per share data):



                                                                 Six Months
                                                                    Ended
                                                                  June 30,
                                                               ---------------
                                                                2001    2000
                                                               ------- -------
                                                                 
  Numerator:
     Income before extraordinary item......................... $28,347 $64,610
  Denominator:
     Denominator for basic earnings per share--
     weighted-average shares..................................  71,026  71,844
     Effect of dilutive securities:
         Employee stock options...............................   1,850   1,144
         Warrants.............................................   3,056   2,435
         Series A perpetual convertible preferred stock.......  12,000  12,000
         Series B perpetual convertible preferred stock.......   5,000   5,000

                                                               ------- -------
     Denominator for diluted earnings per share--
     adjusted weighted-average shares.........................  92,932  92,423

                                                               ======= =======
  Earnings per share-basic:
     Income before extraordinary item......................... $  0.40 $  0.90
     Extraordinary item, net..................................    0.16

                                                               ------- -------
     Net Income............................................... $  0.24 $  0.90

                                                               ======= =======
  Earnings per share-diluted:
     Income before extraordinary item-........................ $  0.31 $  0.70
     Extraordinary item, net.................................. $  0.13

                                                               ======= =======
     Net income............................................... $  0.18 $  0.70

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



7. Stock Plans


    2001 Senior Stock Plan. In June 2001, the Company's shareholders approved
the adoption of the 2001 Senior Stock Plan. This plan provides for the awarding
of common stock and other equity-linked awards to our officers and directors.
The maximum number of shares of common stock that can be issued under the plan
is 4,000,000. The Company records each share that is awarded under this plan at
an amount no less than 100% of the fair market value per share at the date of
the award. No shares may be awarded under this plan after June 5, 2011. As of
June 30, 2001, 2,015,000 shares had been awarded under this plan.
Determinations concerning the persons to receive awards, the form,


                                     F-10



                             UNITED RENTALS, INC.

       NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


amount and timing of such awards and terms and provisions of such awards are
made by the Board of Directors (or a committee appointed by the Board of
Directors).



    2001 Stock Plan. In March 2001, the Company adopted the 2001 Stock Plan.
This plan provides for the awarding of common stock and other equity-linked
awards to certain employees (other than officers and directors) and others who
render services to the Company. The maximum number of shares of common stock
that can be issued under the plan is 2,000,000. The Company records each share
that is awarded under this plan at an amount no less than 100% of the fair
market value per share at the date of the award. No shares may be awarded under
this plan after March 23, 2011. As of June 30, 2001, 752,041 shares had been
awarded under this plan. Determinations concerning the persons to receive
awards, the form, amount and timing of such awards and terms and provisions of
such awards are made by the Board of Directors (or a committee appointed by the
Board of Directors).


    The Company records the issuance of restricted shares at the quoted market
price on the date of the grants. Amortization of deferred compensation is then
recognized on a straight-line basis over the related vesting period.

8. Comprehensive Income

    The following table sets forth the Company's comprehensive income (in
thousands):






                                                             Six Months
                                                               Ended
                                                              June 30,
                                                          ----------------
                                                           2001     2000
                                                          -------  -------
                                                             
      Net income......................................... $17,030  $64,610
      Other comprehensive gain (loss):
         Foreign currency translation adjustment.........  (3,448)     342
         Cumulative effect on equity of adopting FAS 133.  (2,516)
         Derivatives qualifying as hedges................  (1,813)

                                                          -------  -------
      Comprehensive income............................... $ 9,253  $64,952
                                                          =======  =======



9. Derivative Financial Instruments

    The FASB issued, and subsequently amended, SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", which became effective for the
Company on January 1, 2001. Under SFAS No. 133, all derivatives are required to
be recorded as assets or liabilities and measured at fair value. Gains or
losses resulting from changes in the values of derivatives are recognized
immediately or deferred, depending on the use of the derivative and whether or
not it qualifies as a hedge.

    The Company occasionally uses derivative financial instruments to manage
its risk associated with fluctuations in interest rates on its debt. As of June
30, 2001, the Company had outstanding interest rate swap agreements that
converts a portion, or $200.0 million, of its variable rate term loan to a
fixed rate instrument through 2003. These swap agreements are designated as
cash flow hedges and changes in fair value of the hedges are recorded in other
comprehensive income and reclassified into earnings in the same periods during
which the hedged transaction affects earnings. There is no ineffectiveness
related to these hedges.

                                     F-11




                             UNITED RENTALS, INC.



       NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)




10. Condensed Consolidating Financial Information of Guarantor Subsidiaries



    Certain indebtedness of URI, a wholly-owned subsidiary of Holdings (the
"Parent"), is guaranteed by URI's United States subsidiaries (the "guarantor
subsidiaries") and, in certain cases, also by Parent. However, this
indebtedness is not guaranteed by URI's foreign subsidiaries (the
"non-guarantor subsidiaries"). The guarantor subsidiaries are all wholly owned
and the guarantees are made on a joint and several basis and are full and
unconditional (subject to subordination provisions and subject to a standard
limitation which provides that the maximum amount guaranteed by each guarantor
will not exceed the maximum amount that can be guaranteed without making the
guarantee void under fraudulent conveyance laws). Separate consolidated
financial statements of the guarantor subsidiaries have not been presented
because management believes such information would not be material to
investors. However, condensed consolidating financial information as of June
30, 2001 and December 31, 2000 and for the six and three months ended June 30,
2001 and 2000, are presented. The condensed consolidating financial information
of URI and its subsidiaries are as follows:



                     CONDENSED CONSOLIDATING BALANCE SHEET





                                                                     June 30, 2001
                                      --------------------------------------------------------------------------
                                                                               Non-
                                                               Guarantor    Guarantor    Other and   Consolidated
                                        Parent       URI      Subsidiaries Subsidiaries Eliminations    Total
                                      ----------  ----------  ------------ ------------ ------------ ------------
                                                                    (In thousands)
                                                                                   
ASSETS
Cash and cash equivalents............                          $   30,586   $   5,549                 $   36,135
Accounts receivable, net.............             $   59,479      324,470     106,606                    490,555
Intercompany receivable (payable)....                211,682       49,370    (261,052)
Inventory............................                 52,232       56,973       5,365                    114,570
Prepaid expenses and other assets....                 54,508      119,215       1,176   $     8,986      183,885
Rental equipment, net................                956,034      768,444     126,926                  1,851,404
Property and equipment, net.......... $   35,111     143,055      233,614      16,796                    428,576
Investment in subsidiaries...........  1,814,909   2,330,924                             (4,145,833)
Intangible assets, net...............                869,416    1,209,403     130,702                  2,209,521

                                      ----------  ----------   ----------   ---------   -----------   ----------
                                      $1,850,020  $4,677,330   $2,792,075   $ 132,068   $(4,136,847)  $5,314,646

                                      ==========  ==========   ==========   =========   ===========   ==========
LIABILITIES AND STOCKHOLDER'S
 EQUITY
Liabilities:
   Accounts payable..................             $   71,448   $  222,935   $  17,631                 $  312,014
   Debt.............................. $  300,000   2,523,718      214,768      21,262   $  (300,000)   2,759,748
   Deferred income taxes.............                230,056           50                                230,106
   Accrued expenses and other
    liabilities......................      9,255      42,280       93,864      13,681        12,933      172,013

                                      ----------  ----------   ----------   ---------   -----------   ----------
      Total liabilities..............    309,255   2,867,502      531,617      52,574      (287,067)   3,473,881
Commitments and contingencies........
Company-obligated mandatorily
 redeemable convertible preferred
 securities of a subsidiary trust....                                                       300,000      300,000
Stockholders' equity:
   Preferred Stock...................          5                                                               5
   Common stock......................        732                                                             732
   Additional paid-in capital........  1,241,127   1,496,393    1,838,411      65,901    (3,400,705)   1,241,127
   Deferred compensation.............    (59,255)                                                        (59,255)
   Retained earnings.................    372,880     317,764      422,047      23,988      (763,799)     372,880
   Accumulated other comprehensive
    income...........................    (14,724)     (4,329)                 (10,395)       14,724      (14,724)

                                      ----------  ----------   ----------   ---------   -----------   ----------
      Total stockholders' equity.....  1,540,765   1,809,828    2,260,458      79,494    (4,149,780)   1,540,765

                                      ----------  ----------   ----------   ---------   -----------   ----------
                                      $1,850,020  $4,677,330   $2,792,075   $ 132,068   $(4,136,847)  $5,314,646

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



                                     F-12




                             UNITED RENTALS, INC.



       NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)



                     CONDENSED CONSOLIDATING BALANCE SHEET






                                                                  December 31, 2000
                                      -------------------------------------------------------------------------
                                                                              Non-
                                                              Guarantor    Guarantor    Other and   Consolidated
                                        Parent       URI     Subsidiaries Subsidiaries Eliminations    Total
                                      ----------  ---------- ------------ ------------ ------------ ------------
                                                             (In thousands)
                                                                                  
Assets
Cash and cash equivalents............                         $   29,733   $   4,651                 $   34,384
Accounts receivable, net.............             $  216,444     143,295     109,855                    469,594
Intercompany receivable (payable)....                319,423     (55,187)   (264,236)
Inventory............................                 54,022      73,979       5,379                    133,380
Prepaid expenses and other assets....                 28,263      75,633         597                    104,493
Rental equipment, net................                837,972     766,219     128,644                  1,732,835
Property and equipment, net.......... $   34,807     139,871     231,195      16,366                    422,239
Investment in subsidiaries...........  1,839,952   2,257,692                           $(4,097,644)
Intangible assets, net...............                960,444   1,132,438     134,126                  2,227,008

                                      ----------  ----------  ----------   ---------   -----------   ----------
                                      $1,874,759  $4,814,131  $2,397,305   $ 135,382   $(4,097,644)  $5,123,933

                                      ==========  ==========  ==========   =========   ===========   ==========
Liabilities and Stockholder's Equity
Liabilities:
   Accounts payable..................             $   78,623  $  165,677   $  15,855                 $  260,155
   Debt.............................. $  300,000   2,647,144       3,484      24,739   $  (300,000)   2,675,367
   Deferred income taxes.............                186,091      20,702        (550)                   206,243
   Accrued expenses and other
    liabilities......................     28,816      86,560      18,862      13,750       (11,763)     136,225

                                      ----------  ----------  ----------   ---------   -----------   ----------
      Total liabilities..............    328,816   2,998,418     208,725      53,794      (311,763)   3,277,990
Commitments and contingencies........
Company-obligated mandatorily
 redeemable convertible preferred
 securities of a subsidiary trust....                                                      300,000      300,000
Stockholders' equity:
   Preferred stock...................          5                                                              5
   Common stock......................        711                                                            711
   Additional paid-in capital........  1,196,324   1,488,238   1,830,500      65,657    (3,384,395)   1,196,324
   Retained earnings.................    355,850     327,475     358,080      22,878      (708,433)     355,850
   Accumulated other comprehensive
    loss.............................     (6,947)                             (6,947)        6,947       (6,947)

                                      ----------  ----------  ----------   ---------   -----------   ----------
      Total stockholders' equity.....  1,545,943   1,815,713   2,188,580      81,588    (4,085,881)   1,545,943

                                      ----------  ----------  ----------   ---------   -----------   ----------
                                      $1,874,759  $4,814,131  $2,397,305   $ 135,382   $(4,097,644)  $5,123,933

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



                                     F-13




                             UNITED RENTALS, INC.



       NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)



                CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS





                                                              For the Six Months Ended June 30, 2001
                                             ------------------------------------------------------------------------
                                                                  Guarantor   Non-Guarantor  Other and   Consolidated
                                              Parent     URI     Subsidiaries Subsidiaries  Eliminations    Total
                                             --------  --------  ------------ ------------- ------------ ------------
                                                                          (In thousands)
                                                                                       
Revenues:
   Equipment rentals........................           $446,995    $549,950      $46,805                  $1,043,750
   Sales of rental equipment................             33,722      32,104        6,413                      72,239
     Sales of equipment and merchandise
      and other revenues....................            127,949     128,094       15,085                     271,128

                                             --------  --------    --------      -------      --------    ----------
Total revenues..............................            608,666     710,148       68,303                   1,387,117
Cost of revenues:
    Cost of equipment rentals, excluding
     depreciation...........................            191,408     284,455       24,273                     500,136
   Depreciation of rental equipment.........             77,870      70,337       10,147                     158,354
   Cost of rental equipment sales...........             21,190      17,387        3,804                      42,381
    Cost of equipment and merchandise
     sales and other operating costs........             95,705      90,819       11,092                     197,616

                                             --------  --------    --------      -------      --------    ----------
Total cost of revenues......................            386,173     462,998       49,316                     898,487

                                             --------  --------    --------      -------      --------    ----------
Gross profit................................            222,493     247,150       18,987                     488,630
Selling, general and administrative
 expenses...................................             94,457     114,886       12,372                     221,715
Restructuring charge........................             28,922                                               28,922
Non-rental depreciation and amortization.... $  4,286    20,291      25,725        2,936                      53,238

                                             --------  --------    --------      -------      --------    ----------
Operating income (loss).....................   (4,286)   78,823     106,539        3,679                     184,755
Interest expense............................    9,750   107,825       6,046          718      $ (9,750)      114,589
Preferred dividends of a subsidiary trust...                                                     9,750         9,750
Other (income) expense, net.................             14,725      (8,853)       1,063                       6,935

                                             --------  --------    --------      -------      --------    ----------
Income (loss) before provision (benefit) for
 income taxes and extraordinary item........  (14,036)  (43,727)    109,346        1,898                      53,481
Provision (benefit) for income taxes........   (6,270)  (14,763)     45,379          788                      25,134

                                             --------  --------    --------      -------      --------    ----------
Income before extraordinary item and equity
 in net earnings of subsidiaries............   (7,766)  (28,964)     63,967        1,110                      28,347
Extraordinary item..........................             11,317                                               11,317

                                             --------  --------    --------      -------      --------    ----------
Income (loss) before equity in net earnings
 of subsidiaries............................   (7,766)  (40,281)     63,967        1,110                      17,030
Equity in net earnings of subsidiaries......   24,796    65,077                               $(89,873)

                                             --------  --------    --------      -------      --------    ----------
Net income.................................. $ 17,030  $ 24,796    $ 63,967      $ 1,110      $(89,873)   $   17,030

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



                                     F-14




                             UNITED RENTALS, INC.



       NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)



                CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS





                                                       For the Six Months Ended June 30, 2000
                                       ----------------------------------------------------------------------
                                                                            Non-
                                                            Guarantor    Guarantor    Other and   Consolidated
                                        Parent     URI     Subsidiaries Subsidiaries Eliminations    Total
                                       --------  --------  ------------ ------------ ------------ ------------
                                                                   (In thousands)
                                                                                
Revenues:
   Equipment rentals..................           $378,801    $484,540     $48,291                  $  911,632
   Sales of rental equipment..........             74,484      68,315      12,372                     155,171
   Sales of equipment and
   merchandise and other revenues.....            112,041     114,201      15,863                     242,105

                                       --------  --------    --------     -------     ---------    ----------
Total revenues........................            565,326     667,056      76,526                   1,308,908
Cost of revenues:
   Cost of equipment rentals,
   excluding depreciation.............            162,317     211,389      22,908                     396,614
   Depreciation of rental equipment...             70,016      79,670       9,349                     159,035
   Cost of rental equipment sales.....             43,989      39,471       7,708                      91,168
   Cost of equipment and
   merchandise sales and other
   operating costs....................             91,840      79,645      12,824                     184,309

                                       --------  --------    --------     -------     ---------    ----------
Total cost of revenues................            368,162     410,175      52,789                     831,126

                                       --------  --------    --------     -------     ---------    ----------
Gross profit..........................            197,164     256,881      23,737                     477,782
Selling, general and administrative
 expenses.............................             92,687     106,523      11,759                     210,969
Non-rental depreciation and
 amortization......................... $  3,566    17,912      16,597       2,646                      40,721

                                       --------  --------    --------     -------     ---------    ----------
Operating income......................   (3,566)   86,565     133,761       9,332                     226,092
Interest expense......................    9,750   104,617         195       1,398     $  (9,750)      106,210
Preferred dividends of a subsidiary
 trust................................                                                    9,750         9,750
Other (income) expense, net...........              3,929      (4,422)        181                        (312)

                                       --------  --------    --------     -------     ---------    ----------
Income (loss) before provision for
 income taxes.........................  (13,316)  (21,981)    137,988       7,753                     110,444
Provision (benefit) for income taxes..   (5,575)   (9,122)     57,265       3,266                      45,834

                                       --------  --------    --------     -------     ---------    ----------
Income (loss) before equity in net
 earnings of subsidiaries.............   (7,741)  (12,859)     80,723       4,487                      64,610
Equity in net earnings of subsidiaries   72,351    85,210                             $(157,561)

                                       --------  --------    --------     -------     ---------    ----------
Net income............................ $ 64,610  $ 72,351    $ 80,723     $ 4,487     $(157,561)   $   64,610

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


                                     F-15




                             UNITED RENTALS, INC.



       NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)



                 CONDENSED CONSOLIDATING CASH FLOW INFORMATION





                                                             For the Six Months Ended June 30, 2001
                                          --------------------------------------------------------------------------
                                                                  Guarantor   Non-guarantor  Other and
                                           Parent       URI      Subsidiaries Subsidiaries  Eliminations Consolidated
                                          --------  -----------  ------------ ------------- ------------ ------------
                                                                         (In thousands)
                                                                                       
Net cash provided by (used in) operating
 activities.............................. $ (4,007) $   205,885    $ 78,440     $ 18,137                 $   298,455
Cash flows from investing activities:
   Purchases of rental equipment.........              (199,566)    (89,546)     (14,169)                   (303,281)
   Purchases of property and
    equipment............................   (3,603)      (6,627)    (18,907)      (2,289)                    (31,426)
   Proceeds from sales of rental
    equipment............................                33,722      32,104        6,413                      72,239
   Capital contributed to subsidiary.....   (8,155)                                           $  8,155
   Purchases of other companies..........               (36,983)                    (818)                    (37,801)
   In-process acquisition costs..........   (2,140)                                                           (2,140)

                                          --------  -----------    --------     --------      --------   -----------
      Net cash used in investing
       activities........................  (13,898)    (209,454)    (76,349)     (10,863)        8,155       (302,409)
Cash flows from financing activities:
   Proceeds from debt....................             1,979,144          11                                1,979,155
   Payments of debt......................            (1,922,168)     (1,249)      (2,865)                 (1,926,282)
   Payments of financing costs...........               (27,055)                     (63)                    (27,118)
   Capital contributions by parent.......                 8,155                                 (8,155)
   Dividend distributions to parent......               (34,507)                                34,507
   Shares repurchased and retired........  (24,758)                                                          (24,758)
   Proceeds from the exercise of
    common stock options.................    8,156                                                             8,156
   Proceeds from the dividends from
    subsidiary...........................   34,507                                             (34,507)

                                          --------  -----------    --------     --------      --------   -----------
      Net cash provided by (used in)
       financing activities..............   17,905        3,569      (1,238)      (2,928)       (8,155)        9,153
   Effect of foreign exchange rates......                                         (3,448)                     (3,448)

                                          --------  -----------    --------     --------      --------   -----------
   Net decrease in cash and cash
    equivalents..........................                               853          898                       1,751
   Cash and cash equivalents at
    beginning of period..................                            29,733        4,651                      34,384

                                          --------  -----------    --------     --------      --------   -----------
   Cash and cash equivalents at end
    of period............................                          $ 30,586     $  5,549                 $    36,135

                                          ========  ===========    ========     ========      ========   ===========
Supplemental disclosure of cash flow
 information:
   Cash paid for interest................ $  9,750  $    94,892    $  4,562     $    819                 $   110,023
   Cash paid for income taxes, net of
    refunds..............................           $     1,584                 $   (865)                $       719
Supplemental disclosure of non-cash
 investing and financing activities:
The Company acquired the net assets
 and assumed certain liabilities of other
 companies as follows:
   Assets, net of cash acquired..........           $     4,624                 $    833                 $     5,457
   Liabilities assumed...................                  (842)                    (194)                     (1,036)
   Less:
      Amounts paid through issuance
       of debt...........................                  (600)                                                (600)

                                          --------  -----------    --------     --------      --------   -----------
                                                          3,182                      639                       3,821
   Due to seller and other payments......                33,801                      179                      33,980

                                          --------  -----------    --------     --------      --------   -----------
      Net cash paid......................           $    36,983                 $    818                 $    37,801

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



                                     F-16




                             UNITED RENTALS, INC.



       NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)



                 CONDENSED CONSOLIDATING CASH FLOW INFORMATION






                                                            For the Six Months Ended June 30, 2000
                                                 -----------------------------------------------------------  ------------
                                                                       Guarantor   Non-guarantor  Other and
                                                  Parent      URI     Subsidiaries Subsidiaries  Eliminations Consolidated
-                                                --------  ---------  ------------ ------------- ------------ ------------
                                                                              (In thousands)
                                                                                            
Net cash provided by (used in) operating
 activities                                      $  1,117  $(106,798)  $ 356,725     $ 11,772      $      9    $ 262,825
Cash flows from investing activities:
   Purchases of rental equipment................            (127,778)   (368,805)     (17,234)                  (513,817)
   Purchases of property and equipment..........  (13,585)   (12,678)    (41,512)      (1,466)                   (69,241)
   Proceeds from sales of rental equipment......              74,484      68,315       12,372                    155,171
   Payments of contingent purchase price........                (851)     (5,702)                                 (6,553)
   Purchases of other companies.................            (261,982)                  (3,102)                  (265,084)
   Capital contributed to subsidiary............      (96)                                               96
   In-process acquisition costs.................   (2,445)                                                        (2,445)

                                                 --------  ---------   ---------     --------      --------    ---------
      Net cash used in investing activities.....  (16,126)  (328,805)   (347,704)      (9,430)           96     (701,969)
Cash flows from financing activities:
   Proceeds from debt...........................             357,250      19,653                                 376,903
   Payments of debt.............................             (19,929)    (14,037)      (4,251)                   (38,217)
   Proceeds from sale-leaseback.................             147,515                                             147,515
   Payments of financing costs..................              (7,155)                                    (9)      (7,164)
   Capital contributions by parent..............                  96                                    (96)
   Dividend distributions to parent.............             (45,863)                                45,863
   Proceeds from the exercise of common
    stock options...............................       96                                                             96
   Proceeds from dividends from subsidiary......   45,863                                           (45,863)
   Shares repurchased and retired...............  (30,950)                                                       (30,950)

                                                 --------  ---------   ---------     --------      --------    ---------
      Net cash provided by (used in)
       financing activities.....................   15,009    431,914       5,616       (4,251)         (105)     448,183
   Effect of foreign exchange rates.............                                          342                        342

                                                 --------  ---------   ---------     --------      --------    ---------
   Net increase (decrease) in cash and
    cash equivalents............................              (3,689)     14,637       (1,567)                     9,381
   Cash and cash equivalents at beginning
    of period...................................               3,689      16,414        3,708                     23,811

                                                 --------  ---------   ---------     --------      --------    ---------
   Cash and cash equivalents at end of
    period......................................                       $  31,051     $  2,141                  $  33,192

                                                 ========  =========   =========     ========      ========    =========
Supplemental disclosure of cash flow
 information:
   Cash paid for interest....................... $  9,750  $  89,682   $     243     $  1,371                  $ 101,046
   Cash paid for income taxes...................           $  55,791                 $  6,929                  $  62,720
Supplemental disclosure of non-cash
 investing and financing activities:
The Company acquired the net assets and
 assumed certain liabilities of other
 companies as follows:
   Assets, net of cash acquired.................           $ 387,989                 $  4,884                  $ 392,873
   Liabilities assumed..........................            (100,810)                  (1,782)                  (102,592)
   Less:
      Amounts paid through issuance of
       debt.....................................             (25,197)                                            (25,197)

                                                 --------  ---------   ---------     --------      --------    ---------
         Net cash paid..........................           $ 261,982                 $  3,102                  $ 265,084

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



                                     F-17



                        REPORT OF INDEPENDENT AUDITORS

Board of Directors
United Rentals, Inc.

    We have audited the accompanying consolidated balance sheets of United
Rentals, Inc. as of December 31, 2000 and 1999 and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 2000. These consolidated financial
statements are the responsibility of the management of United Rentals, Inc. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of United Rentals, Inc. at December 31, 2000 and 1999, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2000 in conformity with accounting principles
generally accepted in the United States.

                                    /S/ ERNST & YOUNG LLP
MetroPark, New Jersey
February 23, 2001





                                     F-18



                             UNITED RENTALS, INC.

                          CONSOLIDATED BALANCE SHEETS





                                                                             December 31
                                                                        ----------------------
                                                                           2000        1999
                                                                        ----------  ----------
                                                                        (In thousands, except
                                                                             share data)
                                                                              
Assets
Cash and cash equivalents.............................................. $   34,384  $   23,811
Accounts receivable, net of allowance for doubtful accounts of $55,624
  and $58,376 at 2000 and 1999, respectively...........................    469,594     434,985
Inventory..............................................................    133,380     129,473
Prepaid expenses and other assets......................................    104,493      81,457
Rental equipment, net..................................................  1,732,835   1,659,733
Property and equipment, net............................................    422,239     304,907
Goodwill, net of accumulated amortization of $103,219 and
  $49,556 at 2000 and 1999, respectively...............................  2,215,532   1,853,279
Other intangible assets, net...........................................     11,476      10,093
                                                                        ----------  ----------
                                                                        $5,123,933  $4,497,738
                                                                        ==========  ==========
Liabilities and Stockholders' Equity
Liabilities:
   Accounts payable.................................................... $  260,155  $  242,946
   Debt................................................................  2,675,367   2,266,148
   Deferred taxes......................................................    206,243      81,229
   Accrued expenses and other liabilities..............................    136,225     209,929

                                                                        ----------  ----------
       Total liabilities...............................................  3,277,990   2,800,252
Commitments and contingencies
Company-obligated mandatorily redeemable convertible preferred
  securities of a subsidiary trust.....................................    300,000     300,000
Stockholders' equity:
   Preferred stock--$.01 par value, 5,000,000 shares authorized:
     Series A perpetual convertible preferred stock--$300,000
       liquidation preference, 300,000 shares issued and outstanding
       in 2000 and 1999................................................          3           3
     Series B perpetual convertible preferred stock--$150,000
       liquidation preference, 150,000 shares issued and outstanding
       in 2000 and 1999................................................          2           2
   Common stock--$.01 par value, 500,000,000 shares authorized,
     71,065,707 shares issued and outstanding in 2000 and
     72,051,095 shares issued and outstanding in 1999..................        711         721
   Additional paid-in capital..........................................  1,196,324   1,216,968
   Retained earnings...................................................    355,850     179,475
   Accumulated other comprehensive (loss) income.......................     (6,947)        317

                                                                        ----------  ----------
       Total stockholders' equity......................................  1,545,943   1,397,486

                                                                        ----------  ----------
                                                                        $5,123,933  $4,497,738

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



                            See accompanying notes.

                                     F-19



                             UNITED RENTALS, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS



                                                                Year Ended December 31
                                                       ---------------------------------------
                                                           2000          1999         1998
                                                        ----------    ----------   ----------
                                                       (in thousands, except per share amounts
                                                                         
Revenues:
 Equipment rentals.................................... $2,056,683    $1,581,026   $  895,466
 Sales of rental equipment............................    347,678       235,678      119,620
 Sales of equipment and merchandise and other revenues    514,500       416,924      205,196
                                                        ----------    ----------   ----------
Total revenues........................................  2,918,861     2,233,628    1,220,282
Cost of revenues:
 Cost of equipment rentals, excluding depreciation....    907,477       676,972      394,750
 Depreciation of rental equipment.....................    328,131       280,641      175,910
 Cost of rental equipment sales.......................    208,182       136,678       66,136
 Cost of equipment and merchandise sales and other
   operating costs....................................    386,501       314,419      160,038
                                                        ----------    ----------   ----------
Total cost of revenues................................  1,830,291     1,408,710      796,834
                                                        ----------    ----------   ----------
Gross profit..........................................  1,088,570       824,918      423,448
Selling, general and administrative expenses..........    454,330       352,595      195,620
Merger-related expenses...............................                                47,178
Non-rental depreciation and amortization..............     86,301        62,867       35,248
                                                        ----------    ----------   ----------
Operating income......................................    547,939       409,456      145,402
Interest expense......................................    228,779       139,828       64,157
Preferred dividends of a subsidiary trust.............     19,500        19,500        7,854
Other (income) expense, net...........................     (1,836)        8,321       (4,906)
                                                        ----------    ----------   ----------
Income before provision for income taxes and
  extraordinary item..................................    301,496       241,807       78,297
Provision for income taxes............................    125,121        99,141       43,499
                                                        ----------    ----------   ----------
Income before extraordinary item......................    176,375       142,666       34,798
Extraordinary item, net of tax benefit of $14,255.....                                21,337
                                                        ----------    ----------   ----------
Net income............................................ $  176,375    $  142,666   $   13,461
                                                        ==========    ==========   ==========
Earnings per share--basic:
 Income before extraordinary item..................... $     2.48    $     2.00   $     0.53
 Extraordinary item, net..............................                                  0.33
                                                        ----------    ----------   ----------
 Net income........................................... $     2.48    $     2.00   $     0.20
                                                        ==========    ==========   ==========
Earnings per share--diluted:
 Income before extraordinary item..................... $     1.89    $     1.53   $     0.48
 Extraordinary item, net..............................                                  0.30
                                                        ----------    ----------   ----------
 Net income........................................... $     1.89    $     1.53   $     0.18
                                                        ==========    ==========   ==========


                            See accompanying notes.

                                     F-20



                             UNITED RENTALS, INC.

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY



                                       Series A        Series B
                                       Perpetual       Perpetual
                                      Convertible     Convertible
                                    Preferred Stock Preferred Stock    Common Stock
                                    --------------- --------------- -----------------
                                     Number          Number           Number           Additional            Compre-
                                       of              of               of              Paid-in    Retained  hensive
                                     Shares  Amount  Shares  Amount   Shares    Amount  Capital    Earnings  Income
                                    -------  ------ -------  ------ ----------  ------ ----------  --------  --------
                                                                  (In thousands, except share amounts)
                                                                                  
Balance, December 31, 1997.........                                 56,239,375   $562  $  401,758  $ 44,068
  Comprehensive income:
   Net income......................                                                                  13,461  $ 13,461
   Other comprehensive income:
    Foreign currency translation
     adjustments...................                                                                              (281)
                                                                                                             --------
  Comprehensive income.............                                                                          $ 13,180
                                                                                                             ========
  Issuance of common stock and
   warrants........................                                 10,813,255    108     267,214
  Conversion of convertible notes..                                     30,947                461
  Cancellation of common stock.....                                   (137,600)    (1)          1
  Reclassification of Subchapter S
   accumulated earnings to paid-
   in-capital......................                                                        18,979   (18,979)
  Pooling-of-interests.............                                  1,456,997     15         (14)    1,795
  Exercise of common stock
   options.........................                                     25,025                619
  Subchapter S distributions of a
   pooled entity...................                                                                  (3,536)
                                                                    ----------   ----  ----------  --------
Balance, December 31, 1998.........                                 68,427,999    684     689,018    36,809
  Comprehensive income:
   Net income......................                                                                 142,666  $142,666
   Other comprehensive income:
    Foreign currency translation
     adjustments...................                                                                               598
                                                                                                             --------
  Comprehensive income.............                                                                          $143,264
                                                                                                             ========
  Issuance of Series A perpetual
   convertible preferred stock..... 300,000    $3                                         286,997
  Issuance of Series B perpetual
   convertible preferred stock.....                 150,000    $2                         143,798
  Issuance of common stock.........                                  2,291,568     23      64,678
  Exercise of common stock
   options.........................                                  1,331,528     14      32,477
                                    -------    --   -------    --   ----------   ----  ----------  --------
Balance, December 31, 1999......... 300,000     3   150,000     2   72,051,095    721   1,216,968   179,475
  Comprehensive income:
   Net income......................                                                                 176,375  $176,375
   Other comprehensive income:
    Foreign currency translation
     adjustments...................                                                                            (7,264)
                                                                                                             --------
  Comprehensive income.............                                                                          $169,111
                                                                                                             ========
  Issuance of common stock.........                                    773,320      8       9,867
  Exercise of common stock
   options.........................                                     26,307                421
  Shares repurchased and retired...                                 (1,785,015)   (18)    (30,932)
                                    -------    --   -------    --   ----------   ----  ----------  --------
Balance, December 31, 2000......... 300,000    $3   150,000    $2   71,065,707   $711  $1,196,324  $355,850
                                    =======    ==   =======    ==   ==========   ====  ==========  ========







                                     Accumulated
                                        Other
                                    Comprehensive
                                    (Loss) Income
                                    -------------

                                 
Balance, December 31, 1997.........
  Comprehensive income:
   Net income......................
   Other comprehensive income:
    Foreign currency translation
     adjustments...................    $  (281)

  Comprehensive income.............

  Issuance of common stock and
   warrants........................
  Conversion of convertible notes..
  Cancellation of common stock.....
  Reclassification of Subchapter S
   accumulated earnings to paid-
   in-capital......................
  Pooling-of-interests.............
  Exercise of common stock
   options.........................
  Subchapter S distributions of a
   pooled entity...................
                                       -------
Balance, December 31, 1998.........       (281)
  Comprehensive income:
   Net income......................
   Other comprehensive income:
    Foreign currency translation
     adjustments...................        598

  Comprehensive income.............

  Issuance of Series A perpetual
   convertible preferred stock.....
  Issuance of Series B perpetual
   convertible preferred stock.....
  Issuance of common stock.........
  Exercise of common stock
   options.........................
                                       -------
Balance, December 31, 1999.........        317
  Comprehensive income:
   Net income......................
   Other comprehensive income:
    Foreign currency translation
     adjustments...................     (7,264)

  Comprehensive income.............

  Issuance of common stock.........
  Exercise of common stock
   options.........................
  Shares repurchased and retired...
                                       -------
Balance, December 31, 2000.........    $(6,947)
                                       =======


                            See accompanying notes.

                                     F-21



                             UNITED RENTALS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                                                         Year Ended December 31
                                                                                  -----------------------------------
                                                                                    2000        1999         1998
                                                                                  ---------  -----------  -----------
                                                                                             (In thousands)
                                                                                                 
Cash Flows From Operating Activities:
Net income....................................................................... $ 176,375  $   142,666  $    13,461
Adjustments to reconcile net income to net cash provided by operating activities:
  Depreciation and amortization..................................................   414,432      343,508      212,311
  Gain on sales of rental equipment..............................................  (139,496)     (99,000)     (53,484)
  Gain on sales of businesses....................................................    (4,084)      (1,842)      (4,189)
  Write down of assets held for sale.............................................                               4,040
  Extraordinary item.............................................................                              35,592
  Deferred taxes.................................................................   109,280       41,820       27,345
Changes in operating assets and liabilities:
  Accounts receivable............................................................     8,613      (93,716)     (53,368)
  Inventory......................................................................    69,706       (6,544)      (6,392)
  Prepaid expenses and other assets..............................................   (29,848)       7,257       (3,526)
  Accounts payable...............................................................   (16,091)      64,453       39,251
  Accrued expenses and other liabilities.........................................   (76,166)      22,758        5,088
                                                                                  ---------  -----------  -----------
   Net cash provided by operating activities.....................................   512,721      421,360      216,129
                                                                                  ---------  -----------  -----------

Cash Flows From Investing Activities:
Purchases of rental equipment....................................................  (808,204)    (718,112)    (479,534)
Purchases of property and equipment..............................................  (153,770)    (123,649)     (84,617)
Proceeds from sales of rental equipment..........................................   347,678      235,678      119,620
Proceeds from sales of businesses................................................    19,246        6,521       10,640
Purchases of other companies.....................................................  (347,337)    (986,790)    (911,837)
Payments of contingent purchase price............................................   (16,266)      (8,216)      (3,956)
In-process acquisition costs.....................................................    (4,285)      (1,002)        (241)
                                                                                  ---------  -----------  -----------
   Net cash used in investing activities.........................................  (962,938)  (1,595,570)  (1,349,925)
                                                                                  ---------  -----------  -----------

Cash Flows From Financing Activities:
Proceeds from issuance of common stock, net of issuance costs....................                 64,701      207,005
Proceeds from the issuance of Series A Preferred, net of issuance costs..........                287,000
Proceeds from the issuance of Series B Preferred, net of issuance costs..........                143,800
Proceeds from debt...............................................................   456,202    1,083,616    1,263,637
Payments on debt.................................................................  (134,599)    (497,650)    (685,667)
Proceeds from sale-leaseback.....................................................   193,478       88,000       35,000
Proceeds from the issuance of redeemable convertible preferred securities........                             300,000
Payments of financing costs......................................................   (16,408)     (19,443)     (34,982)
Proceeds from the exercise of common stock options...............................       331       26,989          619
Subchapter S distributions of a pooled entity....................................                              (3,536)
Shares repurchased and retired...................................................   (30,950)
                                                                                  ---------  -----------  -----------
   Net cash provided by financing activities.....................................   468,054    1,177,013    1,082,076
Effect of foreign exchange rates.................................................    (7,264)         598         (281)
                                                                                  ---------  -----------  -----------
Net increase (decrease) in cash and cash equivalents.............................    10,573        3,401      (52,001)
Cash and cash equivalents at beginning of year...................................    23,811       20,410       72,411
                                                                                  ---------  -----------  -----------
Cash and cash equivalents at end of year......................................... $  34,384  $    23,811  $    20,410
                                                                                  =========  ===========  ===========


                            See accompanying notes.

                                     F-22



                             UNITED RENTALS, INC.

              CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued)



                                                                                   Year Ended December 31
                                                                             ---------------------------------
                                                                               2000        1999        1998
                                                                             ---------  ----------  ----------
                                                                                       (In thousands)
                                                                                           
Supplemental disclosure of cash flow information:
Cash paid for interest...................................................... $ 248,763  $  124,285  $   43,157
Cash paid for taxes, net of refunds......................................... $  23,746  $   17,509  $   10,224

Supplemental schedule of non-cash investing and financing activities
The Company acquired the net assets and assumed certain liabilities of other
 companies as follows:
  Assets, net of cash acquired.............................................. $ 565,114  $1,468,567  $1,501,467
  Liabilities assumed.......................................................  (142,277)   (472,382)   (518,861)
  Less:
   Amounts paid in common stock and warrants................................   (10,000)                (60,304)
   Amounts paid through issuance of debt....................................   (65,500)     (9,395)    (10,465)
                                                                             ---------  ----------  ----------
Net cash paid............................................................... $ 347,337  $  986,790  $  911,837
                                                                             =========  ==========  ==========





                            See accompanying notes.

                                     F-23



                             UNITED RENTALS, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Basis of Presentation

    United Rentals, Inc. is principally a holding company ("Holdings") and
conducts its operations primarily through its wholly owned subsidiary United
Rentals (North America), Inc. ("URI") and subsidiaries of URI. Holdings was
incorporated in July 1998 and became the parent of URI on August 5, 1998,
pursuant to the reorganization of the legal structure of URI described in Note
9. Prior to such reorganization, the name of URI was United Rentals, Inc.
References herein to the "Company" refer to Holdings and its subsidiaries, with
respect to periods following the reorganization, and to URI and its
subsidiaries, with respect to periods prior to the reorganization. As a result
of the reorganization, Holdings' primary asset is its sole ownership of all
issued and outstanding shares of common stock of URI. URI's various credit
agreements and debt instruments place restrictions on its ability to transfer
funds to its shareholder.

    The Company rents a broad array of equipment to a diverse customer base
that includes construction industry participants, industrial companies,
homeowners and others in the United States, Canada and Mexico. The Company also
engages in related activities such as selling rental equipment, acting as a
distributor for certain new equipment and selling related merchandise and
parts. The nature of the Company's business is such that short-term obligations
are typically met by cash flow generated from long-term assets. Therefore, the
accompanying balance sheets are presented on an unclassified basis.

    The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries, giving retroactive effect for
the reorganization for all periods presented. All significant intercompany
accounts and transactions have been eliminated. The accompanying consolidated
financial statements for the year ended December 31, 1998 include the accounts
of certain acquisitions completed in 1998 that were accounted for as
poolings-of-interests, as described in Note 3.

2. Summary of Significant Accounting Policies

Cash Equivalents

    The Company considers all highly liquid instruments with a maturity of
three months or less when purchased to be cash equivalents.

Inventory

    Inventory consists of equipment, tools, parts, fuel and related supply
items. Inventory is stated at the lower of cost or market and is net of a
reserve for obsolescence and shrinkage of $15.5 million and $16.8 million at
December 31, 2000 and 1999, respectively. Cost is determined on either a
weighted average or first-in, first-out method.

Rental Equipment

    Rental equipment is recorded at cost and depreciated over the estimated
useful lives of the equipment using the straight-line method. The range of
estimated useful lives for rental equipment is two to ten years. Rental
equipment is depreciated to a salvage value of zero to ten percent of cost.
Ordinary repair and maintenance costs are charged to operations as incurred.

Property and Equipment

    Property and equipment are recorded at cost and depreciated over their
estimated useful lives using the straight-line method. The range of estimated
useful lives for property and equipment is two to

                                     F-24



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


thirty-nine years. Ordinary repair and maintenance costs are charged to
operations as incurred. Leasehold improvements are amortized using the
straight-line method over their estimated useful lives or the remaining life of
the lease, whichever is shorter.

Intangible Assets

    Intangible assets consist of the excess of cost over the fair value of
identifiable net assets of businesses acquired and non-compete agreements. The
non-compete agreements are being amortized on a straight-line basis for a
period ranging from three to eight years. The remaining intangible assets are
being amortized on a straight-line basis over forty years.

Long-Lived Assets

    Long-lived assets are recorded at the lower of amortized cost or fair
value. As part of an ongoing review of the valuation of long-lived assets, the
Company assesses the carrying value of such assets if facts and circumstances
suggest they may be impaired. If this review indicates that the carrying value
of these assets may not be recoverable, as determined by a nondiscounted cash
flow analysis over the remaining useful life, the carrying value would be
reduced to its estimated fair value. There have been no material impairments
recognized in these financial statements.

Derivative Financial Instruments

    Derivative financial instruments, which are periodically used by the
Company in the management of its interest rate and foreign currency exposures,
are accounted for on an accrual basis. Income and expense are recorded in the
same category as that arising from the related asset or liability. The fair
value of these agreements are not recognized in the financial statements.
Derivative financial instruments are not used for trading purposes.

Fair Value of Financial Instruments

    The carrying amounts reported in the balance sheets for accounts
receivable, accounts payable, accrued expenses and other liabilities
approximate fair value due to the immediate to short-term maturity of these
financial instruments. The fair values of the Credit Facility, Term Loan B,
Term Loan C, Term Loan D, receivables securitization and certain other debt are
determined using current interest rates for similar instruments as of December
31, 2000 and 1999 and approximate the carrying value of these financial
instruments due to the fact that the underlying instruments include provisions
to adjust interest rates to approximate fair market value. The estimated fair
value of the Company's other financial instruments at December 31, 2000 and
1999 are based upon available market information and are as follows:



                                            2000                       1999
                                 -------------------------- --------------------------
                                 Carrying Amount Fair Value Carrying Amount Fair Value
                                 --------------- ---------- --------------- ----------
                                                    (In thousands)
                                                                
Redeemable convertible preferred
  securities....................    $300,000      $133,125     $300,000      $192,375
Senior subordinated notes.......     951,153       702,500      950,653       906,400
Other debt......................      94,086        94,086       73,745        73,745


Revenue Recognition

    Revenue related to the sale of equipment and merchandise is recognized at
the time of delivery to, or pick-up by, the customer. Revenue related to rental
equipment is recognized over the contract term.

                                     F-25



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)



Advertising Expense

    The Company advertises primarily through trade publications and yellow
pages. Advertising costs are expensed as incurred and totaled $23.8 million,
$19.0 million and $13.5 million for the years ended December 31, 2000, 1999 and
1998, respectively.

Income Taxes

    The Company uses the liability method of accounting for income taxes. Under
this method, deferred tax assets and liabilities are determined based on the
differences between financial statement and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that are expected to be
in effect when the differences are expected to reverse. Recognition of deferred
tax assets is limited to amounts considered by management to be more likely
than not realized in future periods.

Use of Estimates

    The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

Concentrations of Credit Risk

    Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash investments and
accounts receivable. The Company maintains cash and cash equivalents with high
quality financial institutions.

    Concentration of credit risk with respect to accounts receivable are
limited because a large number of geographically diverse customers make up the
Company's customer base. No single customer represents greater than 10% of
total accounts receivable. The Company controls credit risk through credit
approvals, credit limits, and monitoring procedures.

Stock-Based Compensation

    The Company accounts for its stock based compensation arrangements under
the provisions of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees". Since stock options are granted by
the Company with exercise prices at or greater than the fair value of the
shares at the date of grant, no compensation expense is recognized.

Insurance

    The Company is insured for general liability, workers' compensation, and
group medical claims up to a specified claim and aggregate amounts (subject to
a deductible of one million dollars). Insured losses subject to this deductible
are accrued based upon the aggregate liability for reported claims incurred and
an estimated liability for claims incurred but not reported. These liabilities
are not discounted.


                                     F-26



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Impact of Recently Issued Accounting Standards

    In June 1999, the Financial Accounting Standards Board ("FASB'') issued
Statement of Financial Accounting Standards ("SFAS'') No. 137, "Accounting for
Derivative Instruments and Hedging Activities--Deferral of the Effective Date
of FASB Statement No. 133." This standard delays the effective date of SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities," for one
year, to fiscal years beginning after June 15, 2000. SFAS No. 133 establishes a
new model for accounting for derivatives and hedging activities. The adoption
of SFAS No. 133 on January 1, 2001 is not expected to have a material effect on
the Company's consolidated financial position or results of operations.

    In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities." This standard amends
SFAS No. 133 and addresses a limited number of issues causing implementation
difficulties. The Company will adopt SFAS No. 138 on January 1, 2001 and it is
not expected to have a material effect on the Company's consolidated financial
position or results of operations.

    In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities--a
replacement of FASB Statement No. 125." This standard revises the standards for
accounting for securitizations and other transfers of financial assets and
collateral and requires certain disclosures. This standard is effective for
transfers and servicing of financial assets and extinguishments of liabilities
occurring after March 31, 2001 and for disclosures relating to securitization
transactions and collateral for fiscal years ending after December 15, 2000.
The adoption of SFAS No. 140 is not expected to have a material effect on the
Company's consolidated financial position or results of operations.

Reclassifications

    Certain prior year balances have been reclassified to conform to the 2000
presentation.

3. Acquisitions

Acquisitions Accounted for as Poolings-of-Interests

    On August 24, 1998, the Company issued 2,744,368 shares of its common stock
for all of the outstanding shares of common stock of Rental Tools.

    On September 24, 1998, the Company issued 1,456,997 shares of its common
stock for all of the outstanding shares of common stock of Wynne Systems, Inc.
This transaction was accounted for as a pooling-of-interests; however, this
transaction was not material to the Company's consolidated operations and
financial position and, therefore, the Company's financial statements have not
been restated for this transaction but have been combined beginning July 1,
1998.

    On September 29, 1998, a merger (the "Merger") of United Rentals, Inc. and
U.S. Rentals was completed. The Merger was effected by having a wholly owned
subsidiary of United Rentals, Inc. merge with and into U.S. Rentals. Following
the Merger, United Rentals, Inc. contributed the capital stock of U.S. Rentals
to URI, a wholly owned subsidiary of United Rentals, Inc. Pursuant to the
Merger, each outstanding share of common stock of U.S. Rentals was converted
into the right to receive 0.9625 of a share of common stock of United Rentals,
Inc. An aggregate of approximately 29.6 million shares of United Rentals, Inc.
common stock were issued in the Merger in exchange for the outstanding shares
of U.S. Rentals common stock.


                                     F-27



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


    The table below shows the separate revenue and net income (loss) of the
Company prior to the above mergers ("United"), U.S. Rentals and Rental Tools
for periods prior to combination:



                                                         U.S.    Rental
                                               United   Rentals  Tools   Combined
                                              --------  -------- ------- --------
                                                         (In thousands)
                                                             
For the nine months ended September 30, 1998:
   Revenues.................................. $311,919  $451,101 $41,242 $804,262
   Net income (loss).........................  (53,178)   43,670   4,695   (4,813)


Acquisitions Accounted for as Purchases

    The acquisitions completed during the years ended December 31, 2000, 1999
and 1998 include 53, 102 and 81 acquisitions, respectively, that were accounted
for as purchases. The results of operations of the businesses acquired in these
acquisitions have been included in the Company's results of operations from
their respective acquisition dates.

    During 2000, the Company purchased the outstanding stock and certain assets
of (i) Liddell Brothers Inc., in February, (ii) Safety Lites Sales and Leasing,
Inc., in March, (iii) Durante Equipment Corp., Inc., in June, (iv) Horizon High
Reach, Inc., in September, and (v) Wiese Planning & Engineering Inc., in
December. The aggregate initial consideration paid for these five acquisitions
that were accounted for as purchases was approximately $153.1 million and
consisted of $83.8 million in cash and 761,905 shares of common stock and $59.3
million in seller notes. In addition, the Company repaid or assumed outstanding
indebtedness of these companies acquired in the aggregate amount of
approximately $5.5 million.

    The aggregate initial consideration paid by the Company for other 2000
acquisitions that were accounted for as purchases was $210.2 million and
consisted of approximately $184.6 million in cash and $6.2 million in seller
notes. In addition, the Company repaid or assumed outstanding indebtedness of
the companies acquired in the other 2000 acquisitions in the aggregate amount
of $77.5 million.

    During 1999, the Company purchased the outstanding stock and certain assets
of (i) National Equipment Finance Company, in June, (ii) Mi-Jack Products, Inc.
and related entities, in May, (iii) Elmen Rent All, Inc., in June (iv) Forte,
Inc., in March, and (v) Arayco, Inc. in June. The aggregate initial
consideration paid for these five acquisitions that were accounted for as
purchases was approximately $275.4 million and consisted of $270.4 million in
cash and $5.0 million in seller notes. In addition, the Company repaid or
assumed outstanding indebtedness of these companies acquired in the aggregate
amount of approximately $99.8 million.

    The aggregate initial consideration paid by the Company for other 1999
acquisitions accounted for as purchases was $663.6 million and consisted of
approximately $659.2 million in cash and $4.4 million in seller notes. In
addition, the Company repaid or assumed outstanding indebtedness of the
companies acquired in the other 1999 acquisitions in the aggregate amount of
approximately $239.3 million.

    In January 1998 the Company purchased the outstanding stock and certain
assets of (i) Access Rentals, Inc. and Affiliate, (ii) the BNR Group of
Companies and (iii) Mission Valley Rentals, Inc. The aggregate initial
consideration paid by the Company for these three acquisitions that were
accounted for as purchases was $88.7 million and consisted of approximately
$81.4 million in cash and 370,231 shares of common stock and warrants to
purchase an aggregate of 30,000 shares of the Company's common stock. In
addition, the Company repaid or assumed outstanding indebtedness of these three
companies acquired in the aggregate amount of $64.0 million.

                                     F-28



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)



    Also during 1998, the Company purchased the outstanding stock and certain
assets of (i) Power Rental Co., Inc., in June (ii) Equipment Supply Co., Inc.
and Affiliates in June and (iii) McClinch Inc. and Subsidiaries and McClinch
Equipment Services, Inc. in September. The aggregate initial consideration paid
by the Company for these three acquisitions that were accounted for as
purchases was $298.4 million and consisted of approximately $278.0 million in
cash and 496,063 shares of common stock. In addition, the Company repaid or
assumed outstanding indebtedness of these three companies acquired in the
aggregate amount of $155.4 million.

    The aggregate initial consideration paid by the Company for other 1998
acquisitions that were accounted for as purchases was $550.4 million and
consisted of approximately $507.3 million in cash and 1,083,997 shares of
common stock, and seller notes of $10.5 million. In addition, the Company
repaid or assumed outstanding indebtedness of the other companies acquired in
1998 in the aggregate amount of $211.8 million.


    The purchase prices for all acquisitions accounted for as purchases have
been allocated to the assets acquired and liabilities assumed based on their
respective fair values at their respective acquisition dates. However, the
Company has not completed its valuation of all of its purchases and,
accordingly, the purchase price allocations are subject to change when
additional information concerning asset and liability valuations are completed.
The preliminary purchase price allocations that are subject to change primarily
consists of rental and non-rental equipment valuations. These allocations are
finalized within 12 months of the acquisition date and are not expected to
result in significant differences between the preliminary and final
allocations.


    The following table summarizes, on an unaudited pro forma basis, the
combined results of operations of the Company for the years ended December 31,
2000 and 1999 as though each acquisition described above was made on January 1,
for each of the periods.



                                              2000       1999
                                           ---------- ----------
                                           (In thousands, except
                                              per share data)
                                                
                Revenues.................. $3,095,872 $2,956,543
                Net income................    182,342    154,084
                Basic earnings per share.. $     2.54 $     2.14
                                           ========== ==========
                Diluted earnings per share $     1.94 $     1.64
                                           ========== ==========


    The unaudited pro forma results are based upon certain assumptions and
estimates which are subject to change. These results are not necessarily
indicative of the actual results of operations that might have occurred, nor
are they necessarily indicative of expected results in the future.

Merger-Related Expenses, Extraordinary Item and Other Costs

    The results of operations for the year ended December 31, 1999 include
pre-tax expenses related to a terminated tender offer totaling approximately
$18.2 million ($10.8 million after tax), primarily consisting of $8.3 million
in professional fees recorded in selling, general and administrative expense
and $9.9 million in financing commitment fees recorded in other (income)
expense, net.

    The results of operations for the year ended December 31, 1998, include
pre-tax expenses related to three acquisitions accounted for as
poolings-of-interests totaling approximately $47.2 million ($33.2 million
after-tax), consisting of (i) $18.5 million for investment banking, legal,
accounting services and other merger costs, (ii) $14.5 million of expenses
relating to the closing of duplicate facilities, (iii) $8.2 million for
employee severance and related matters, (iv) $2.1 million for the write down of
computer systems acquired through the U.S. Rentals merger and one of the other
acquisitions accounted for as a pooling-of-interests and (v) $3.9 million in
other expenses.

                                     F-29



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)



    The Company recorded a pre-tax extraordinary item of $35.6 million ($21.3
million after-tax) in 1998. The charge related to the early extinguishment of
debt primarily related to the Merger with U.S. Rentals.

4. Rental Equipment

    Rental equipment consists of the following:



                                    December 31
                              ----------------------
                                 2000        1999
                              ----------  ----------
                                  (In thousands)
                                    
Rental equipment............. $2,281,994  $2,098,624
Less accumulated depreciation   (549,159)   (438,891)
                              ----------  ----------
Rental equipment, net........ $1,732,835  $1,659,733
                              ----------  ----------


5. Property and Equipment

    Property and equipment consist of the following:



                                                   December 31
                                               -------------------
                                                 2000       1999
                                               ---------  --------
                                                  (In thousands)
                                                    
Land.......................................... $  53,612  $ 50,143
Buildings.....................................   104,925    91,934
Transportation equipment......................   228,265   139,944
Machinery and equipment.......................    36,587    31,484
Furniture and fixtures........................    56,109    46,507
Leasehold improvements........................    48,952    26,387
                                               ---------  --------
                                                 528,450   386,399
Less accumulated depreciation and amortization  (106,211)  (81,492)
                                               ---------  --------
Property and equipment, net................... $ 422,239  $304,907
                                               =========  ========


6. Accrued Expenses and Other Liabilities

    Accrued expenses and other liabilities consist of the following:



                          December 31
                       -----------------
                         2000     1999
                       -------- --------
                        (In thousands)
                          
Accrued profit sharing $ 39,485 $ 39,052
Accrued insurance.....   15,428   22,738
Accrued interest......   36,993   37,477
Other.................   44,319  110,662
                       -------- --------
                       $136,225 $209,929
                       ======== ========


                                     F-30



                             UNITED RENTALS, INC.

       NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


7. Debt

    Debt consists of the following:



                                                                  December 31
                                                             ---------------------
                                                                2000       1999
                                                             ---------- ----------
                                                                (In thousands)
                                                                  
Credit Facility, interest payable at a weighted average rate
  of 7.8% and 6.9% at December 31, 2000 and 1999,
  respectively.............................................. $  337,000 $  243,000
Term Loan B, interest payable at 8.89% and 8.71% at
  December 31, 2000 and 1999, respectively..................    246,875    248,750
Term Loan C, interest payable at 9.26% and 8.96% at
  December 31, 2000 and 1999, respectively..................    748,125    750,000
Term Loan D, interest payable at a weighted average rate of
  9.18% at December 31, 2000................................    198,128
Senior Subordinated Notes, interest payable semi-annually,
  (9 1/2% at December 31, 2000 and 1999)....................    200,000    200,000
Senior Subordinated Notes, interest payable semi-annually,
  (8.80% at December 31, 2000 and 1999).....................    201,153    200,653
Senior Subordinated Notes, interest payable semi-annually,
  (9 1/4% at December 31, 2000 and 1999)....................    300,000    300,000
Senior Subordinated Notes, interest payable semi-annually,
  (9% at December 31, 2000 and 1999)........................    250,000    250,000
Receivables securitization, interest payable at 7.44% at
  December 31, 2000.........................................    100,000
Other debt, interest payable at various rates ranging from
  4% to 11% and 6% to 12.3% at December 31, 2000 and
  1999, respectively, due through 2007......................     94,086     73,745

                                                             ---------- ----------
                                                             $2,675,367 $2,266,148

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


    Credit Facility. The Company has a credit facility (the "Credit Facility")
which enables URI to borrow up to $827.5 million on a revolving basis and
permits a Canadian subsidiary of URI (the "Canadian Subsidiary") to directly
borrow up to $40.0 million under the Credit Facility (provided that the
aggregate borrowings of URI and the Canadian Subsidiary do not exceed $827.5
million). Up to $50.0 million ($1.4 million outstanding at December 31, 2000)
of the Credit Facility is available in the form of letters of credit. The
agreement governing the Credit Facility requires that the aggregate commitment
shall be reduced on the last day of each calendar quarter, beginning September
30, 2001 and continuing through June 30, 2003, by an amount equal to $20.7
million. The Credit Facility terminates on September 26, 2003, at which time
all outstanding indebtedness is due.

    Borrowings by URI under the Credit Facility accrue interest at URI's
option, at either (a) the Base Rate (which is equal to the greater of (i) the
Federal Funds Rate plus 0.5% or (ii) Bank of America's reference rate) or (b)
the Eurodollar Rate (which for borrowings by URI is equal to Bank of America's
reserve adjusted eurodollar rate) plus a margin ranging from 1.200% to 1.875%
per annum. Borrowings by the Canadian Subsidiary under the Credit Facility
accrue interest, at such subsidiary's option, at either (x) the Prime Rate
(which is equal to Bank of America Canada's prime rate), (y) the BA Rate (which
is equal to Bank of America Canada's BA Rate) plus a margin ranging from 1.200%
to 1.875% per annum or (z) the Eurodollar Rate (which for borrowing by the
Canadian Subsidiary is equal to Bank of America Canada's reserve adjusted
Eurodollar Rate) plus a margin ranging from 1.200% to 1.875% per annum. If at
any time an event of default (as defined in the agreement governing the Credit
Facility) exists, the interest rate applicable to each loan will increase by 2%
per annum. The Company

                                     F-31



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


is also required to pay the banks an annual facility fee equal to 0.375% of the
banks' $827.5 million aggregate lending commitment under the Credit Facility
(which fee may be reduced to 0.300% for periods during which the Company
maintains a specified funded debt to cash flow ratio).

    The obligations of URI under the Credit Facility are (i) secured by
substantially all of its assets, the stock of its United States subsidiaries
and a portion of the stock of URI's Canadian subsidiaries and (ii) guaranteed
by Holdings and secured by the stock of URI. The obligations of the Canadian
Subsidiary under the Credit Facility are guaranteed by URI and secured by
substantially all of the assets of the Canadian Subsidiary and the stock of the
subsidiaries of the Canadian Subsidiary.

    The Credit Facility contains certain covenants that require the Company to,
among other things, satisfy certain financial tests relating to: (a) maximum
leverage, (b) the ratio of senior debt to cash flow, (c) minimum interest
coverage ratio, (d) the ratio of funded debt to cash flow, and (e) the ratio of
senior debt to tangible assets. The agreements governing the Credit Facility
also contain various other covenants that restrict the Company's ability to,
among other things, (i) incur additional indebtedness, (ii) permit liens to
attach to its assets, (iii) pay dividends or make other restricted payments on
its common stock and certain other securities and (iv) make acquisitions unless
certain financial conditions are satisfied. In addition, the agreement
governing the Credit Facility (a) requires the Company to maintain certain
financial ratios and (b) provides that failure by any two of certain of the
Company's executive officers to continue to hold executive positions with the
Company for a period of 30 consecutive days constitutes an event of default
unless replacement officers satisfactory to the lenders are appointed.

    Term Loan B. URI obtained a $250.0 million term loan (the "Term Loan B")
from a group of financial institutions. The Term Loan B matures on June 30,
2005. Prior to maturity, quarterly installments of principal in the amount of
$0.6 million are due on the last day of each calendar quarter, commencing
September 30, 1999. The amount due at maturity is $235.6 million. The Term Loan
B accrues interest, at URI's option, at either (a) the Base Rate (as defined
above with respect to the Credit Facility) plus a margin of 0.375% per annum,
or (b) the Eurodollar Rate (as defined above with respect to the Credit
Facility for borrowings by the Company) plus a margin of 2.25% per annum. The
Term Loan B is secured pari passu with the Credit Facility and the agreement
governing the Term Loan B contains restrictive covenants substantially similar
to those provided under the Credit Facility.

    Term Loan C. URI obtained a $750.0 million term loan from a group of
financial institutions (the "Term Loan C"). The Term Loan C matures in June
2006. Prior to maturity, quarterly installments of principal in the amount of
$1.9 million are due on the last day of each calendar quarter, commencing
September 30, 2000. The amount due at maturity is $706.3 million. The Term Loan
C accrues interest, at URI's option, at either (a) the Base Rate (as defined
above with respect to the Credit Facility) plus a margin of 0.625% per annum,
or (b) the Eurodollar Rate (as defined above with respect to the Credit
Facility) plus a margin of 2.50% per annum. The Term Loan C is secured pari
passu with the Credit Facility and the agreement governing the Term Loan C
contains restrictive covenants substantially similar to those provided under
the Credit Facility.

    Term Loan D. URI obtained a $200.0 million term loan from a financial
institution (the "Term Loan D"). The Term Loan D matures in June 2006. Prior to
maturity, quarterly installments of principal are due on the last day of each
calendar quarter, in the amount of $0.25 million on September 30, 2000 and in
the amount of $0.5 million commencing December 31, 2000 to maturity. The amount
due at maturity is $188.5 million. The Term Loan D accrues interest, at URI's
option, at either (a) the Base

                                     F-32



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


Rate (as defined above with respect to the Credit Facility) plus a margin of
0.625% per annum, or (b) the Eurodollar Rate (as defined above with respect to
the Credit Facility) plus a margin of 2.5% per annum. The Term Loan D is
secured pari passu with the Credit Facility, and the agreement governing the
Term Loan D contains restrictive covenants substantially similar to those
provided under the Credit Facility.

    At December 31, 2000, the Company had interest rate protection in the form
of swap agreements with an aggregate notional amount of $200.0 million. The
effect of these agreements is to limit the interest rate exposure to 8.75% on
$200.0 million of Term Loan B. The overall weighted average interest rate on
the Term Loan B was 8.80% at December 31, 2000. While it is not the Company's
intention to terminate the interest rate swap agreements, the fair values were
estimated by obtaining quotes from brokers which represented the amounts that
the Company would receive or pay if the agreements were terminated. These fair
values indicated that termination of the agreements at December 31, 2000, would
have resulted in a pretax loss of $4.3 million.

    9 1/2% Senior Subordinated Notes. URI issued $200.0 million aggregate
principal amount of 9 1/2% senior subordinated notes, (the "9 1/2 Notes") which
are due June 1, 2008. The 9 1/2% Notes are unsecured. URI may, at its option,
redeem the 9 1/2% Notes on or after June 1, 2003 at specified redemption prices
which range from 104.75% in 2003 to 100.0% in 2006 and thereafter. In addition,
on or prior to June 1, 2001, URI may, at its option, use the proceeds of a
public equity offering to redeem up to 35% of the outstanding 9 1/2% Notes, at
a redemption price of 109.5%. The indenture governing the 9 1/2% Notes contains
certain restrictive covenants, including (i) limitations on additional
indebtedness, (ii) limitations on restricted payments, (iii) limitations on
liens, (iv) limitations on dividends and other payment restrictions, (v)
limitations on preferred stock of certain subsidiaries, (vi) limitations on
transactions with affiliates, (vii) limitations on the disposition of proceeds
of asset sales and (viii) limitations on the ability of the Company to
consolidate, merge or sell all or substantially all of its assets.

    8.80% Senior Subordinated Notes. URI issued $205.0 million aggregate
principal amount of 8.80% senior subordinated notes, (the "8.80% Notes") which
are due August 15, 2008. The 8.80% Notes are unsecured. URI may, at its option,
redeem the 8.80% Notes on or after August 15, 2003 at specified redemption
prices which range from 104.4% in 2003 to 100.0% in 2006 and thereafter. In
addition, on or prior to August 15, 2001, URI may, at its option, use the
proceeds of a public equity offering to redeem up to 35% of the outstanding
8.80% Notes, at a redemption price of 108.8%. The indenture governing the 8.80%
Notes contains restrictions substantially similar to those applicable to the 9
1/2% Notes.

    9 1/4% Senior Subordinated Notes. URI issued $300.0 million aggregate
principal amount of 9 1/4% senior subordinated notes, (the "9 1/4% Notes")
which are due January 15, 2009. The 9 1/4% Notes are unsecured. URI may, at its
option, redeem the 9 1/4% Notes on or after January 15, 2004 at specified
redemption prices which range from 104.625% in 2004 to 100.0% in 2007 and
thereafter. In addition, on or prior to January 15, 2002, URI may, at its
option, use the proceeds of a public equity offering to redeem up to 35% of the
outstanding 9 1/4% Notes, at a redemption price of 109.25%. The indenture
governing the 9 1/4% Notes contains restrictions substantially similar to those
applicable to the 9 1/2% Notes.

    9% Senior Subordinated Notes. URI issued $250.0 million aggregate principal
amount of 9% senior subordinated notes, (the "9% Notes") which are due April 1,
2009. The 9% Notes are unsecured. URI may, at its option, redeem the 9% Notes
on or after April 1, 2004 at specified redemption prices which range from
104.5% in 2004 to 100.0% in 2007 and thereafter. In addition, on or prior to
April 1, 2002, URI may, at its option, use the proceeds of a public equity
offering to redeem

                                     F-33



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


up to 35% of the outstanding 9% Notes, at a redemption price of 109.0%. The
indenture governing the 9% Notes contains restrictions substantially similar to
those applicable to the 9 1/2% Notes.

    Receivables Securitization. In December 2000, the Company obtained $100.0
million through the securitization of certain of its accounts receivable. In
the securitization, the Company transferred $203.0 million of its accounts
receivable to a special purpose subsidiary (the "SPV") which in turn pledged
those receivables to secure $100.0 million of borrowings that the SPV incurred
to finance its acquisition of those receivables from the Company. These
borrowings accrue interest at Credit Lyonnais' blended commercial paper rate
plus a margin of 0.75% per annum. These borrowings are an obligation of the SPV
and not of Holdings or URI, and the lenders' recourse in respect of the
borrowings is generally limited to collections that the SPV receives on the
receivables. Collections on the receivables are used to service the borrowings.
Subject to certain conditions, collections from the receivables may also be
used by the SPV from time to time until December 2003 to acquire additional
accounts receivables from the Company that the SPV will pledge to the lenders
to secure the borrowings.

    Maturities of the Company's debt for each of the next five years at
December 31, 2000 are as follows (In thousands):


        
2001...... $   33,787
2002......     29,512
2003......    464,498
2004......     33,984
2005......    250,043
Thereafter  1,863,543


8. Income Taxes

    The provision for historical federal and state income taxes is as follows:



                                          Year ended December 31
                                         ------------------------
                                           2000    1999    1998
                                         -------- ------- -------
                                              (In thousands)
                                                 
              Historical:
                 Domestic federal:
                     Current............ $ 10,419 $39,643 $14,291
                     Deferred...........   97,756  37,598  21,047
                                         -------- ------- -------
                                          108,175  77,241  35,338
                 Domestic state:
                     Current............    3,587  10,405   1,067
                     Deferred...........    6,815   3,437   7,020
                                         -------- ------- -------
                                           10,402  13,842   8,087
                                         -------- ------- -------
                     Total domestic.....  118,577  91,083  43,425

                 Foreign federal:
                     Current............    1,061   4,917     519
                     Deferred...........    3,590     465    (492)
                                         -------- ------- -------
                                            4,651   5,382      27
                 Foreign provincial:
                     Current............      774   2,356     277
                     Deferred...........    1,119     320    (230)
                                         -------- ------- -------
                                            1,893   2,676      47
                                         -------- ------- -------
                     Total foreign......    6,544   8,058      74
                                         -------- ------- -------
                                         $125,121 $99,141 $43,499
                                         ======== ======= =======


                                     F-34



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


    A reconciliation of the provision for income taxes and the amount computed
by applying the statutory federal income tax rate of 35% to income before
provision for income taxes is as follows:



                                                              Year ended December 31
                                                            -------------------------
                                                              2000    1999     1998
                                                            -------- -------  -------
                                                                  (In thousands)
                                                                     
Computed tax rate at statutory tax rate.................... $105,524 $84,632  $27,404
State income taxes, net of federal tax benefit.............    6,762   8,997    4,177
Non-deductible expenses....................................    9,992   6,265    7,400
Provision for deferred taxes of Subchapter S Corporation at
  time of pooling..........................................                     4,750
Other......................................................    2,843    (753)    (232)
                                                            -------- -------  -------
                                                            $125,121 $99,141  $43,499
                                                            ======== =======  =======


    The components of deferred income tax assets (liabilities) are as follows:



                                                 December 31
                                            --------------------
                                              2000       1999
                                            ---------  ---------
                                               (In thousands)
                                                 
Property and equipment..................... $(298,058) $(175,180)
Intangibles................................   (32,518)   (13,188)
Reserves and allowances....................    37,460     48,577
Net operating loss and credit carryforwards    84,257     56,266
Other......................................     2,616      2,296

                                            ---------  ---------
                                            $(206,243) $ (81,229)
                                            =========  =========


    The current and deferred tax assets and liabilities at December 31, 2000
include the effects of certain reclassifications related to differences between
the income tax provisions and tax returns for prior years. These
reclassifications had no effect on net income.

    For financial reporting purposes, income before income taxes and
extraordinary items for the Company's foreign subsidiaries was $15.6 million
and $19.9 million for the years ended December 31, 2000 and 1999, respectively.
At December 31, 2000 and 1999, unremitted earnings of foreign subsidiaries were
approximately $22.9 million and $13.8 million, respectively. Since it is the
Company's intention to indefinitely reinvest these earnings, no United States
taxes have been provided. Determination of the amount of unrecognized deferred
tax liability on these unremitted taxes is not practicable.

    The Company has net operating loss carryforwards ("NOL's") of $138.2
million for federal income tax purposes that expire through 2018.

9. Holding Company Reorganization

    URI was formerly named United Rentals, Inc. On August 5, 1998, a
reorganization was effected pursuant to which (i) URI became a wholly owned
subsidiary of Holdings, a newly formed holding company, (ii) the name of URI
was changed from United Rentals, Inc. to United Rentals (North America), Inc.,
(iii) the name of the new holding company became United Rentals, Inc., (iv) the

                                     F-35



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

outstanding common stock of URI was automatically converted, on a
share-for-share basis, into common stock of Holdings and (v) the common stock
of Holdings commenced trading on the New York Stock Exchange under the symbol
"URI" instead of the common stock of URI. The purpose of the reorganization was
to facilitate certain financings. The business operations of the Company did
not change as a result of the new legal structure. The stockholders of Holdings
have the same rights, privileges and interests with respect to Holdings as they
had with respect to URI immediately prior to the reorganization.

10. Company-Obligated Mandatorily Redeemable Convertible Preferred Securities
of a Subsidiary Trust

    In August 1998, a subsidiary trust (the "Trust") of Holdings issued and
sold in a private offering (the "Preferred Securities Offering") $300.0 million
of 30 year, 6 1/2% Convertible Quarterly Income Preferred Securities (the
"Preferred Securities"). The net proceeds from the Preferred Securities
Offering were approximately $290.0 million. The Trust used the proceeds from
the Preferred Securities Offering to purchase 6 1/2% convertible subordinated
debentures due 2028 (the "Debentures") from Holdings which resulted in Holdings
receiving all of the net proceeds of the Preferred Securities Offering.
Holdings in turn contributed the net proceeds of the Preferred Securities
Offering to URI. The Preferred Securities are non-voting securities, carry a
liquidation value of $50 per security and are convertible into the Company's
common stock at an initial rate of 1.146 shares per security (equivalent to an
initial conversion price of $43.63 per share). They are convertible at any time
at the holders' option and are redeemable, at the Company's option, after three
years, subject to certain conditions.

    Holders of the Preferred Securities are entitled to preferential cumulative
cash distributions from the Trust at an annual rate of 6 1/2% of the
liquidation value, accruing from the original issue date and payable quarterly
in arrears beginning February 1, 1999. The distribution rate and dates
correspond to the interest rate and payments dates on the Debentures. Holdings
may defer interest payments on the Debentures for up to twenty consecutive
quarters, but not beyond the maturity date of the Debentures. If interest
payments on the Debentures are deferred, so are the payments on the Preferred
Securities. Under this circumstance, Holdings will be prohibited from paying
dividends on any of its capital stock or making payments with respect to its
debt that rank pari passu with or junior to the Debentures.

    Holdings has executed a guarantee with regard to payment of the Preferred
Securities to the extent that the Trust has sufficient funds to make the
required payments.

11. Capital Stock

    Series A Perpetual Convertible Preferred Stock. On January 7, 1999,
Holdings sold 300,000 shares of its Series A Perpetual Convertible Preferred
Stock ("Series A Preferred"). Subject to certain thresholds related to the
aggregate number of shares issuable upon conversion of Series A Preferred, the
holders of the Series A Preferred, voting separately as a single class, have
the right, on an as-converted basis, to elect up to two directors. Currently,
holders of the Series A Preferred may elect two directors. Except for the
election of directors, the holders of the Series A Preferred have the same
voting rights as those belonging to holders of Holdings common stock. The net
proceeds from the sale of the Series A Preferred were approximately $287.0
million. Holdings contributed such net proceeds to URI. The Series A Preferred
is convertible into 12,000,000 shares of Holdings common stock at $25 per share
based upon a liquidation preference of $1,000 per share of Series A Preferred,
subject to adjustment. The Series A Preferred has no stated dividend. However,
in the event Holdings declares or

                                     F-36



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

pays any dividends on, or distributions of, its common stock, it must (subject
to certain exceptions) also declare and pay to the holders of Series A
Preferred the dividends and distributions which would have been declared and
paid upon conversion of the Series A Preferred.

    Series B Perpetual Convertible Preferred Stock. On September 30, 1999,
Holdings sold 150,000 shares of its Series B Perpetual Convertible Preferred
Stock ("Series B Preferred"). The Series B Preferred is divided into two
classes designated as Class B-1 and Class B-2. Other than voting rights, the
classes are substantially the same. The holders of the 105,252 shares of Class
B-1 are entitled to the same voting rights, on an as-converted basis, as those
belonging to holders of Holdings common stock. The holders of the 44,748 shares
of Class B-2 have no such voting rights. The net proceeds from the sale of the
Series B Preferred were approximately $143.8 million. Holdings contributed such
net proceeds to URI. The Series B Preferred is convertible into 5,000,000
shares of Holding's common stock at $30 per share based upon a liquidation
preference of $1,000 per share of Series B Preferred, subject to adjustment.
The Series B Preferred has no stated dividend. However, in the event Holdings
declares or pays any dividends on, or distributions of, its common stock, it
must (subject to certain exceptions) also declare and pay to the holders of
Series B Preferred the dividends and distributions which would have been
declared and paid upon conversion of the Series B Preferred.

    Warrants. As of December 31, 2000 there are outstanding warrants to
purchase an aggregate of 7,094,296 shares of common stock. The weighted average
exercise price of the warrants is $11.76 per share. All warrants are currently
exercisable and may be exercised at any time through 2009.

    Common Stock. On March 9, 1999, Holdings completed a public offering of
2,290,000 shares of common stock. The net proceeds to the Company from this
offering were approximately $64.7 million (after deducting underwriting
discounts and offering expenses). Holdings contributed such net proceeds to
URI. During 2000, the Company approved a share repurchase program to acquire up
to $200 million of its issued and outstanding common stock. Share repurchases
under the program may be made from time to time, continuing through May 2002.
During 2000, the Company repurchased and retired 1,785,015 shares of common
stock.

    1997 Stock Option Plan. The Company's 1997 Stock Option Plan provides for
the granting of options to purchase not more than an aggregate of 5,000,000
shares of common stock. Some or all of such options may be "incentive stock
options" within the meaning of the Internal Revenue Code. All officers,
directors and employees of the Company and other persons who perform services
on behalf of the Company are eligible to participate in this plan. Each option
granted pursuant to this plan must provide for an exercise price per share that
is at least equal to the fair market value per share of common stock on the
date of grant. No options may be granted under this plan after August 31, 2007.
As of December 31, 2000 and 1999, options to purchase an aggregate of 4,950,536
shares and 4,731,183 shares of common stock, respectively, were outstanding
under this plan. The exercise price of each option, the period during which
each option may be exercised and other terms and conditions of each option are
determined by the Board of Directors (or by a committee appointed by the Board
of Directors).

    1998 Stock Option Plan. The Company's 1998 Stock Option Plan provides for
the granting of options to purchase not more than an aggregate of 4,200,000
shares of common stock. Some or all of the options issued under the 1998 Stock
Option Plan may be "incentive stock options" within the meaning of the Internal
Revenue Code. All officers and directors of the Company and its subsidiaries
are eligible to participate in the 1998 Stock Option Plan. Each option granted
pursuant to the 1998

                                     F-37



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Stock Option Plan must provide for an exercise price per share that is at least
equal to the fair market value per share of common stock on the date of grant.
No options may be granted under the 1998 Stock Option Plan after August 20,
2008. As of December 31, 2000 and 1999, options to purchase an aggregate of
4,200,000 shares of common stock were outstanding pursuant to this plan to
executive officers and directors. The exercise price of each option, the period
during which each option may be exercised and other terms and conditions of
each option are determined by the Board of Directors (or by a committee
appointed by the Board of Directors).

    1998 Supplemental Stock Option Plan. The Company has adopted a stock option
plan pursuant to which options, for up to an aggregate of 5,600,000 shares of
common stock, may be granted to employees who are not officers or directors and
to consultants and independent contractors who perform services for the Company
or its subsidiaries. As of December 31, 2000 and 1999, options to purchase an
aggregate of 5,373,509 shares and 4,140,384 shares of common stock,
respectively, were outstanding pursuant to this plan. The exercise price of
each option, the period during which each option may be exercised and other
terms and conditions of each option are determined by the Board of Directors
(or by a committee appointed by the Board of Directors).

    1997 Performance Award Plan. Effective February 20, 1997, U.S. Rentals
adopted the 1997 Performance Award Plan under which stock options and other
awards could be granted to key employees and directors at prices and terms
established by U.S. Rentals at the date of grant. The options expire in 2007.
As a result of the Merger, all outstanding options to purchase shares of U.S.
Rentals common stock became fully vested and were converted into options to
purchase the Company's common stock. As of December 31, 2000 and 1999, options
to purchase an aggregate of 2,572,050 shares and 2,581,675 shares of common
stock, respectively, were outstanding pursuant to this plan.

   A summary of the transactions within the Company's stock option plans
follows:



                                             Weighted
                                             Average
                                             Exercise
                                   Shares     Price
                                 ----------  --------
                                       
Outstanding at January 1, 1998..  4,825,699   $19.52
   Granted......................  9,453,718    19.78
   Exercised....................    (25,025)   20.78
   Canceled.....................   (209,578)   22.94
                                 ----------   ------

Outstanding at December 31, 1998 14,044,814    19.60
   Granted......................  3,092,462    26.77
   Exercised.................... (1,331,528)   20.74
   Canceled.....................   (152,506)   26.70
                                 ----------   ------

Outstanding at December 31, 1999 15,653,242    20.86
   Granted......................  1,921,125    16.56
   Exercised....................    (26,307)   16.91
   Canceled.....................   (451,965)   27.03
                                 ----------   ------
Outstanding at December 31, 2000 17,096,095   $20.23
                                 ==========   ======
Exercisable at December 31, 2000 11,906,938   $19.58
                                 ==========   ======


                                     F-38



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)




                               Options Outstanding        Options Exercisable
                         -------------------------------- --------------------
                                      Weighted
                                       Average   Weighted             Weighted
                                      Remaining  Average              Average
                           Amount    Contractual Exercise   Amount    Exercise
Range of Exercise Prices Outstanding    Life      Price   Exercisable  Price
------------------------ ----------- ----------- -------- ----------- --------
                                                       
    $10.00 - $15.00.....  4,722,077   7.7 years   $12.38   4,317,980   $12.30
     15.01 -  20.00.....  1,995,359   9.0 years    16.79     293,787    18.72
     20.01 -  25.00.....  7,146,663   7.1 years    21.77   5,543,191    21.64
     25.01 -  30.00.....  1,821,230   8.2 years    27.33     888,666    27.27
     30.01 -  50.00.....  1,410,766   7.4 years    34.67     863,314    35.08
                         ----------                       ----------
                         17,096,095.  7.6 years    20.23  11,906,938    19.58
                         ==========                       ==========


    The Company applies APB Opinion No. 25, "Accounting for Stock Issued to
Employees" in accounting for stock-based employee compensation arrangements
whereby no compensation cost related to stock options is deducted in
determining net income. Had compensation cost for the Company's stock option
plans been determined pursuant to SFAS No. 123, "Accounting for Stock-Based
Compensation," the Company's net income and earnings per share would have
differed. The weighted average fair value of options granted was $7.70, $10.99
and $11.94 during 2000, 1999 and 1998, respectively. The fair value is
estimated on the date of grant using the Black-Scholes option pricing model
which uses subjective assumptions which can materially affect fair value
estimates and, therefore, does not necessarily provide a single measure of fair
value of options. Using the Black-Scholes option pricing model and a risk-free
interest rate average of 5.15%, 6.29% and 4.6% in 2000, 1999 and 1998,
respectively, a volatility factor for the market price of the Company's common
stock of 69%, 52% and 85% in 2000, 1999 and 1998, respectively, and a
weighted-average expected life of options of approximately three years in 2000,
1999 and 1998, the Company's net income (loss), basic earnings (loss) per share
and diluted earnings (loss) per share would have been $156.4 million, $2.20 and
$1.69, respectively, for the year ended December 31, 2000, $104.3 million,
$1.46 and $1.12, respectively, for the year ended December 31, 1999, and $(13.3
million), $(0.20) and $(0.20), respectively, for the year ended December 31,
1998. For purposes of these pro forma disclosures, the estimated fair value of
options is amortized over the options' vesting period. Since the number of
options granted and their fair value may vary significantly from year to year,
the pro forma compensation expense in future years may be materially different.

    At December 31, 2000 there are (i) 7,094,296 shares of common stock
reserved for the exercise of warrants, (ii) 17,338,256 shares of common stock
reserved for issuance pursuant to options granted and that may be granted in
the future under the Company's stock option plans, (iii) 6,875,580 shares of
common stock reserved for the issuance of outstanding preferred securities of a
subsidiary trust, (iv) 17,000,000 shares of common stock reserved for the
issuance of Series A and Series B preferred stock and (v) 232,586 shares of
common stock reserved for the conversion of convertible debt.

                                     F-39



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


12. Earnings Per Share

    The following table sets forth the computation of historical basic and
diluted earnings per share:



                                                    Year Ended December 31
                                              -----------------------------------
                                                 2000        1999        1998
                                              ----------- ----------- -----------
                                                (In thousands, except share and
                                                        per share data)
                                                             
Numerator:
 Income before extraordinary item............ $   176,375 $   142,666 $    34,798
 Plus: preferred dividends of a subsidiary
   trust, net of taxes.......................      11,406
                                              ----------- ----------- -----------
 Income available to common stockkholders.... $   187,781 $   142,666 $    34,798
                                              =========== =========== ===========
Denominator:
 Denominator for basic earnings per share-
   weighted-average shares...................  71,069,174  71,353,127  66,225,492
 Effect of dilutive securities:
   Employee stock options....................   1,517,015   4,651,237   2,641,194
   Warrants..................................   2,791,387   3,978,536   4,208,434
   Series A Preferred........................  12,000,000  11,802,740
   Series B Preferred........................   5,000,000   1,250,000
   Company-obligated mandatorily
     redeemable convertible preferred
     securities of a subsidiary trust........   6,876,003
                                              ----------- ----------- -----------
 Denominator for dilutive earnings per share-
   adjusted weighted-average shares..........  99,253,579  93,035,640  73,075,120
                                              =========== =========== ===========
Earnings per share-basic:
 Income before extraordinary item............ $      2.48 $      2.00 $      0.53
 Extraordinary item, net.....................                                0.33
                                              ----------- ----------- -----------
 Net income.................................. $      2.48 $      2.00 $      0.20
                                              =========== =========== ===========
Earnings per share-diluted:
 Income before extraordinary item............ $      1.89 $      1.53 $      0.48
 Extraordinary item, net.....................                                0.30
                                              ----------- ----------- -----------
 Net income.................................. $      1.89 $      1.53 $      0.18
                                              =========== =========== ===========


                                     F-40



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


13. Commitments and Contingencies

Operating Leases

    The Company leases rental equipment, real estate and certain office
equipment under operating leases. Certain real estate leases require the
Company to pay maintenance, insurance, taxes and certain other expenses in
addition to the stated rentals. Future minimum lease payments, by year and in
the aggregate, for noncancellable operating leases with initial or remaining
terms of one year or more are as follows at December 31, 2000:



             Real    Rental     Other
            Estate  Equipment Equipment
            Leases   Leases    Leases
           -------- --------- ---------
                  (In thousands)
                     
2001...... $ 51,815 $ 98,158   $17,318
2002......   46,464   93,864    15,372
2003......   42,739   77,597    12,076
2004......   39,706   55,889    10,827
2005......   34,153   43,352     2,487
Thereafter  108,175   34,830
           -------- --------   -------
           $323,052 $403,690   $58,080
           ======== ========   =======


    The Company was the seller-lessee in sale-leaseback transactions in 2000
where it sold rental equipment for aggregate proceeds of $218.8 million, in
1999 where it sold rental equipment for aggregate proceeds of $88.0 million and
in 1998 where it sold rental equipment for aggregate proceeds of $35.0 million.
For the 2000 transactions, the Company agreed to lease back the rental
equipment over periods ranging from eight months to five years. In connection
with the 2000 transactions, the Company recognized a gain of $12.5 million and
recorded deferred gains on the sales of approximately $4.0 million. For the
1999 transaction, the Company agreed to lease back the rental equipment over a
five year period beginning December 1999 and will recognize a deferred gain on
the sale of approximately $6.3 million over the five year period. For the 1998
transaction, the Company agreed to lease back the rental equipment over a five
year period beginning December 1998 and will recognize a deferred gain on the
sale of approximately $0.6 million over the five year period. The future
payments under these leases are included in the table above.

    Rent expense under non-cancelable operating leases totaled $137.3 million,
$65.5 million and $20.5 million for the years ended December 31, 2000, 1999 and
1998, respectively. The Company's real estate leases provide for varying terms
and include 24 leases that are on a month-to-month basis and 42 leases that
provide for a remaining term of less than one year and do not provide a renewal
option.

Employee Benefit Plans

    The Company currently sponsors one defined contribution 401(k) retirement
plan which is subject to the provisions of ERISA. The Company also sponsors a
deferred profit sharing plan for the benefit of the full time employees of its
Canadian subsidiaries. Under these plans, the Company matches a percentage of
the participants contributions up to a specified amount. Company contributions
to the plans were $6.2 million, $4.6 million and $1.0 million for the years
ended December 31, 2000, 1999 and 1998, respectively.

Legal Matters

    The Company is party to legal proceedings and potential claims arising in
the ordinary course of its business. In the opinion of management, the Company
has adequate legal defenses, reserves, or

                                     F-41



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

insurance coverage with respect to these matters so that the ultimate
resolution will not have a material adverse effect on the Company's financial
position, results of operations, or cash flows. The Company had accrued $7.6
million and $13.7 million at December 31, 2000 and 1999, respectively, to cover
the uninsured portion of possible costs arising from these pending claims and
other potential unasserted claims.

Environmental Matters

    The Company and its operations are subject to various laws and related
regulations governing environmental matters. Under such laws, an owner or
lessee of real estate may be liable for the costs of removal or remediation of
certain hazardous or toxic substances located on or in, or emanating from, such
property, as well as investigation of property damage. The Company incurs
ongoing expenses associated with the removal of underground storage tanks and
the performance of appropriate remediation at certain of its locations. The
Company believes that such removal and remediation will not have a material
adverse effect on the Company's financial position, results of operations, or
cash flows.

14. Segment Information

    The Company operates in one industry segment consisting of the rental and
sales of equipment and related merchandise and parts. The Company's operations
are managed as one segment, or strategic unit, because it offers similar
products and services in similar markets and the factors determining strategic
decisions are comparable for all products and services.

    The Company operates in the United States, Canada and Mexico. Revenues are
attributable to countries based upon the location of the customers. Geographic
area information for the years ended December 31, 2000, 1999 and 1998 is as
follows:



                                                    Year ended December 31
                                               --------------------------------
                                                  2000       1999       1998
                                               ---------- ---------- ----------
                                                        (In thousands)
                                                            
Revenues from external customers
 Domestic..................................... $2,753,266 $2,086,808 $1,168,071
 Foreign......................................    165,595    146,820     52,211
                                               ---------- ---------- ----------
Total revenues from external customers........ $2,918,861 $2,233,628 $1,220,282
                                               ========== ========== ==========

Rental equipment, net
 Domestic..................................... $1,604,191 $1,537,199 $1,099,539
 Foreign......................................    128,644    122,534     43,467
                                               ---------- ---------- ----------
Total consolidated rental equipment, net...... $1,732,835 $1,659,733 $1,143,006
                                               ========== ========== ==========

Property and equipment, net
 Domestic..................................... $  405,873 $  285,456 $  180,777
 Foreign......................................     16,366     19,451      4,734
                                               ---------- ---------- ----------
Total consolidated property and equipment, net $  422,239 $  304,907 $  185,511
                                               ========== ========== ==========

Intangible assets, net
 Domestic..................................... $2,092,882 $1,740,326 $  867,090
 Foreign......................................    134,126    123,046     54,975
                                               ---------- ---------- ----------
Total consolidated intangible assets, net..... $2,227,008 $1,863,372 $  922,065
                                               ========== ========== ==========


                                     F-42



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


15. Quarterly Financial Information (Unaudited)

Selected Financial Data

    The following table of quarterly financial information has been prepared
from unaudited financial statements of the Company, and reflects adjustments
which are, in the opinion of management, necessary for a fair presentation of
the interim periods presented.



                                        First    Second    Third   Fourth
                                       Quarter   Quarter  Quarter  Quarter
                                      --------  --------  -------- --------
                                      (In thousands, except per share data)
                                                       
For the year ended December 31, 2000:
 Total revenues...................... $578,962  $729,946  $859,033 $750,920
 Gross profit........................  205,984   271,798   340,704  270,084
 Net income..........................   17,411    47,199    75,391   36,374
 Basic earnings per share............ $   0.24  $   0.66  $   1.07 $   0.51
 Diluted earnings per share..........     0.19      0.51      0.79     0.40

For the year ended December 31, 1999:
 Total revenues...................... $392,309  $503,662  $668,618 $669,039
 Gross profit........................  133,991   184,064   256,979  249,884
 Net income..........................   16,225    25,886    56,208   44,347
 Basic earnings per share............ $   0.24  $   0.36  $   0.78 $   0.62
 Diluted earning per share...........     0.18      0.28      0.60     0.48


16. Condensed Consolidating Financial Information of Guarantor Subsidiaries


    Certain indebtedness of URI, a wholly owned subsidiary of Holdings (the
"Parent"), is guaranteed by URI's United States subsidiaries (the "guarantor
subsidiaries") and, in certain cases, also by Parent. However, this
indebtedness is not guaranteed by URI's foreign subsidiaries (the
"non-guarantor subsidiaries"). The guarantor subsidiaries are all wholly-owned
and the guarantees are made on a joint and several basis and are full and
unconditional (subject to subordination provisions and subject to a standard
limitation which provides that the maximum amount guaranteed by each guarantor
will not exceed the maximum amount that can be guaranteed without making the
guarantee void under fraudulent conveyance laws). Separate consolidated
financial statements of the guarantor subsidiaries have not been presented
because management believes that such information would not be material to
investors. However, condensed consolidating financial information as of
December 31, 2000 and 1999, and for each of the three years in the period ended
December 31, 2000, are presented. The condensed consolidating financial
information of the Company and its subsidiaries are as follows:


                                     F-43



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
                     CONDENSED CONSOLIDATING BALANCE SHEET

                               December 31, 2000



                                                        Guarantor   Non-Guarantor  Other and   Consolidated
                                  Parent       URI     Subsidiaries Subsidiaries  Eliminations    Total
                                ----------  ---------- ------------ ------------- ------------ ------------
                                                              (In thousands)
                                                                             
Assets
Cash and cash equivalents......                         $   29,733   $    4,651                 $   34,384
Accounts receivable, net.......             $  216,444     143,295      109,855                    469,594
Intercompany receivable
 (payable).....................                319,423     (55,187)    (264,236)
Inventory......................                 54,022      73,979        5,379                    133,380
Prepaid expenses and other
 assets........................                 28,263      75,633          597                    104,493
Rental equipment, net..........                837,972     766,219      128,644                  1,732,835
Property and equipment, net.... $   34,807     139,871     231,195       16,366                    422,239
Investment in subsidiaries.....  1,839,952   2,257,692                            $(4,097,644)
Intangible assets, net.........                960,444   1,132,438      134,126                  2,227,008
                                ----------  ----------  ----------   ----------   -----------   ----------
                                $1,874,759  $4,814,131  $2,397,305   $  135,382   $(4,097,644)  $5,123,933
                                ==========  ==========  ==========   ==========   ===========   ==========

Liabilities and Stockholder's
 Equity
Liabilities:
   Accounts payable............             $   78,623  $  165,677   $   15,855                 $  260,155
   Debt........................ $  300,000   2,647,144       3,484       24,739   $  (300,000)   2,675,367
   Deferred taxes..............                186,091      20,702         (550)                   206,243
   Accrued expenses and
    other liabilities..........     28,816      86,560      18,862       13,750       (11,763)     136,225
                                ----------  ----------  ----------   ----------   -----------   ----------
      Total liabilities........    328,816   2,998,418     208,725       53,794      (311,763)   3,277,990

Commitments and
 contingencies
Company-obligated mandatorily
 redeemable convertible
 preferred securities of a
 subsidiary trust..............                                                       300,000      300,000
Stockholder's equity:
   Preferred stock.............          5                                                               5
   Common stock................        711                                                             711
   Additional paid-in capital..  1,196,324   1,488,238   1,830,500       65,657    (3,384,395)   1,196,324
   Retained earnings...........    355,850     327,475     358,080       22,878      (708,433)     355,850
   Accumulated other
    comprehensive
    loss.......................     (6,947)                              (6,947)        6,947       (6,947)
                                ----------  ----------  ----------   ----------   -----------   ----------
      Total stockholder's
       equity..................  1,545,943   1,815,713   2,188,580       81,588   $(4,085,881)   1,545,943
                                ----------  ----------  ----------   ----------   -----------   ----------
                                $1,874,759  $4,814,131  $2,397,305   $  135,382   $(4,097,644)  $5,123,933
                                ==========  ==========  ==========   ==========   ===========   ==========


                                     F-44



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


                     CONDENSED CONSOLIDATING BALANCE SHEET



                                                            December 31, 1999
                                --------------------------------------------------------------------------
                                                       Guarantor   Non-Guarantor  Other and   Consolidated
                                  Parent      URI     Subsidiaries Subsidiaries  Eliminations    Total
                                ---------- ---------- ------------ ------------- ------------ ------------
                                                              (In thousands)
                                                                            
Assets
Cash and cash equivalents......            $    3,689  $   16,414    $   3,708                 $   23,811
Accounts receivable, net.......               200,419     199,981       34,585                    434,985
Intercompany receivable
 (payable).....................               142,156      42,906     (185,062)
Inventory......................                56,086      64,253        9,134                    129,473
Prepaid expenses and other
 assets........................ $   31,554      1,020      18,296       17,809   $    12,778       81,457
Rental equipment, net..........               747,232     789,967      122,534                  1,659,733
Property and equipment, net....     28,383    150,841     106,232       19,451                    304,907
Investment in subsidiaries.....  1,702,802  2,072,115                             (3,774,917)
Intangible assets, net.........               792,198     948,128      123,046                  1,863,372
                                ---------- ----------  ----------    ---------   -----------   ----------
                                $1,762,739 $4,165,756  $2,186,177    $ 145,205   $(3,762,139)  $4,497,738
                                ========== ==========  ==========    =========   ===========   ==========

Liabilities and Stockholder's
 Equity
Liabilities:
   Accounts payable............ $   30,381 $   71,995  $  120,511    $  20,059                 $  242,946
   Debt........................    300,000  2,231,923         380       33,845   $  (300,000)   2,266,148
   Deferred income taxes.......                80,476                      753                     81,229
   Accrued expenses and
    other liabilities..........     34,872    107,828      53,177       10,802         3,250      209,929
                                ---------- ----------  ----------    ---------   -----------   ----------
      Total liabilities........    365,253  2,492,222     174,068       65,459      (296,750)   2,800,252
Commitments and
 contingencies
Company-obligated mandatorily
 redeemable convertible
 preferred securities of a
 subsidiary trust..............                                                      300,000      300,000
Stockholder's equity:
   Preferred stock.............          5                                                              5
   Common stock................        721                                                            721
   Additional paid-in capital..  1,216,968  1,487,907   1,830,182       65,644   $(3,383,733)   1,216,968
   Retained earnings...........    179,475    185,627     181,927       13,785      (381,339)     179,475
   Accumulated other
    comprehensive income.......        317                                 317          (317)         317
                                ---------- ----------  ----------    ---------   -----------   ----------
      Total stockholder's
       equity..................  1,397,486  1,673,534   2,012,109       79,746    (3,765,389)   1,397,486
                                ---------- ----------  ----------    ---------   -----------   ----------
                                $1,762,739 $4,165,756  $2,186,177    $ 145,205   $(3,762,139)  $4,497,738
                                ========== ==========  ==========    =========   ===========   ==========


                                     F-45



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                     For the Year Ended December 31, 2000



                                                         Guarantor   Non-Guarantor  Other and   Consolidated
                                    Parent      URI     Subsidiaries Subsidiaries  Eliminations    Total
                                   --------  ---------- ------------ ------------- ------------ ------------
                                                                (In thousands)
                                                                              
Revenues:
  Equipment rentals...............           $  851,541  $1,094,613   $  110,529                 $2,056,683
  Sales of rental equipment.......              145,519     178,576       23,583                    347,678
  Sales of equipment and
   merchandise and other
   revenues.......................              253,798     229,219       31,483                    514,500
                                   --------  ----------  ----------   ----------    ----------   ----------
Total revenues....................            1,250,858   1,502,408      165,595                  2,918,861
Cost of revenues:
  Cost of equipment rentals,
   excluding depreciation.........              364,047     494,350       49,080                    907,477
  Depreciation of rental
   equipment......................              152,640     155,239       20,252                    328,131
  Cost of rental equipment sales..               87,161     106,617       14,404                    208,182
  Cost of equipment and
   merchandise sales and other
   operating costs................              197,190     164,186       25,125                    386,501
                                   --------  ----------  ----------   ----------    ----------   ----------
Total cost of revenues............              801,038     920,392      108,861                  1,830,291
                                   --------  ----------  ----------   ----------    ----------   ----------
Gross profit......................              449,820     582,016       56,734                  1,088,570
Selling, general and
 administrative expenses..........              184,135     245,431       24,764                    454,330
Non-rental depreciation and
 amortization..................... $  7,718      33,692      39,618        5,273                     86,301
                                   --------  ----------  ----------   ----------    ----------   ----------
Operating income (loss)...........   (7,718)    231,993     296,967       26,697                    547,939
Interest expense..................   19,500     217,904         135       10,740    $  (19,500)     228,779
Preferred dividends of a
 subsidiary trust.................                                                      19,500       19,500
Other (income) expense, net.......                2,129      (4,285)         320                     (1,836)
                                   --------  ----------  ----------   ----------    ----------   ----------
Income (loss) before provision
 (benefit) for income taxes.......  (27,218)     11,960     301,117       15,637                    301,496
Provision (benefit) for income
 taxes............................  (11,295)      4,908     124,964        6,544                    125,121
                                   --------  ----------  ----------   ----------    ----------   ----------
Income (loss) before equity in net
 earnings of subsidiaries.........  (15,923)      7,052     176,153        9,093                    176,375
Equity in net earnings of
 subsidiaries.....................  192,298     185,246                             $ (377,544)
                                   --------  ----------  ----------   ----------    ----------   ----------
Net income........................ $176,375  $  192,298  $  176,153   $    9,093    $ (377,544)  $  176,375
                                   ========  ==========  ==========   ==========    ==========   ==========


                                     F-46



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


                CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                     For the Year Ended December 31, 1999



                                                              Guarantor   Non-Guarantor  Other and   Consolidated
                                          Parent     URI     Subsidiaries Subsidiaries  Eliminations    Total
                                         --------  --------  ------------ ------------- ------------ ------------
                                                                      (In thousand)
                                                                                   
Revenues:
  Equipment rentals.....................           $600,431   $  880,182    $100,413                  $1,581,026
  Sales of rental equipment.............            113,982      106,737      14,959                     235,678
  Sales of equipment and merchandise
   and other revenues...................            195,647      189,829      31,448                     416,924
                                         --------  --------   ----------    --------     ---------    ----------
Total revenues..........................            910,060    1,176,748     146,820                   2,233,628
Cost of revenues:
  Cost of equipment rentals, excluding
   depreciation.........................            250,959      381,718      44,295                     676,972
  Depreciation of rental equipment......            116,385      146,622      17,634                     280,641
  Cost of rental equipment sales........             62,972       64,945       8,761                     136,678
  Cost of equipment and merchandise
   sales and other operating costs......            161,902      128,328      24,189                     314,419
                                         --------  --------   ----------    --------     ---------    ----------
Total cost of revenues..................            592,218      721,613      94,879                   1,408,710
                                         --------  --------   ----------    --------     ---------    ----------
Gross profit............................            317,842      455,135      51,941                     824,918
Selling, general and administrative
 expenses............................... $  8,267   144,341      177,456      22,531                     352,595
Non-rental depreciation and
 amortization...........................    4,926    29,667       24,617       3,657                      62,867
                                         --------  --------   ----------    --------     ---------    ----------
Operating income (loss).................  (13,193)  143,834      253,062      25,753                     409,456
Interest expense........................   19,500   132,929        1,428       5,471     $ (19,500)      139,828
Preferred dividends of a subsidiary
 trust..................................                                                    19,500        19,500
Other (income) expense, net.............    9,689    (1,549)        (524)        427           278         8,321
                                         --------  --------   ----------    --------     ---------    ----------
Income (loss) before provision (benefit)
 for income taxes.......................  (42,382)   12,454      252,158      19,855          (278)      241,807
Provision (benefit) for income taxes....  (17,487)    3,039      105,531       8,058                      99,141
                                         --------  --------   ----------    --------     ---------    ----------
Income (loss) before equity in net
 earnings of subsidiaries...............  (24,895)    9,415      146,627      11,797          (278)      142,666
Equity in net earnings of subsidiaries..  167,561   158,424                               (325,985)
                                         --------  --------   ----------    --------     ---------    ----------
Net income.............................. $142,666  $167,839   $  146,627    $ 11,797     $(326,263)   $  142,666
                                         ========  ========   ==========    ========     =========    ==========


                                     F-47



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


                CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                     For the Year Ended December 31, 1998



                                                              Guarantor   Non-Guarantor  Other and   Consolidated
                                          Parent     URI     Subsidiaries Subsidiaries  Eliminations    Total
                                          -------  --------  ------------ ------------- ------------ ------------
                                                                      (In thousands)
                                                                                   
Revenues:
   Equipment rentals.....................          $213,823    $649,508      $32,135                  $  895,466
   Sales of rental equipment.............            17,992      96,739        4,889                     119,620
   Sales of equipment and merchandise
    and other revenues...................            58,582     131,427       15,187                     205,196
                                          -------  --------    --------      -------      --------    ----------
Total revenues...........................           290,397     877,674       52,211                   1,220,282
Cost of revenues:
   Cost of equipment rentals,
    excluding depreciation...............            91,100     289,892       13,758                     394,750
   Depreciation of rental equipment......            45,602     125,810        4,498                     175,910
   Cost of rental equipment sales........             8,586      54,805        2,745                      66,136
   Cost of equipment and
    merchandise sales and other
    operating costs......................            49,754      98,332       11,952                     160,038
                                          -------  --------    --------      -------      --------    ----------
Total cost of revenues...................           195,042     568,839       32,953                     796,834
                                          -------  --------    --------      -------      --------    ----------
Gross profit.............................            95,355     308,835       19,258                     423,448
Selling, general and administrative
 expenses................................            31,092     155,512        9,016                     195,620
Merger-related expenses..................                        47,178                                   47,178
Non-rental depreciation and
 amortization............................ $   561     8,682      24,769        1,233      $      3        35,248
                                          -------  --------    --------      -------      --------    ----------
Operating income (loss)..................    (561)   55,581      81,376        9,009            (3)      145,402
Interest expense.........................   7,854    33,006      24,193        6,958        (7,854)       64,157
Preferred dividends of a subsidiary trust                                                    7,854         7,854
Other (income) expense, net..............            (2,481)     (2,605)         (11)          191        (4,906)
                                          -------  --------    --------      -------      --------    ----------
Income (loss) before provision (benefit)
 for income taxes and extraordinary
 item....................................  (8,415)   25,056      59,788        2,062          (194)       78,297
Provision (benefit) for income taxes.....  (3,472)   13,850      33,047           74                      43,499
                                          -------  --------    --------      -------      --------    ----------
Income (loss) before extraordinary item
 and equity in net earnings of
 subsidiaries............................  (4,943)   11,206      26,741        1,988          (194)       34,798
Extraordinary item, net..................                        21,337                                   21,337
                                          -------  --------    --------      -------      --------    ----------
Income (loss) before equity in net
 earnings of subsidiaries................  (4,943)   11,206       5,404        1,988          (194)       13,461
Equity in net earnings of subsidiaries...  18,404     7,392                                (25,796)
                                          -------  --------    --------      -------      --------    ----------
Net income............................... $13,461  $ 18,598    $  5,404      $ 1,988      $(25,990)   $   13,461
                                          =======  ========    ========      =======      ========    ==========


                                     F-48



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


                 CONDENSED CONSOLIDATING CASH FLOW INFORMATION
                     For the Year Ended December 31, 2000




                                                                Guarantor   Non-Guarantor  Other and   Consolidated
                                           Parent      URI     Subsidiaries Subsidiaries  Eliminations    Total
                                          --------  ---------  ------------ ------------- ------------ ------------
                                                                       (In thousands)
                                                                                     
Net cash provided by (used in) operating
 activities.............................. $(37,379) $ 243,759   $ 227,855     $ 43,066      $ 35,420    $ 512,721
Cash Flows From Investing Activities:
   Purchases of rental equipment.........            (489,259)   (283,488)     (35,457)                  (808,204)
   Purchases of property and equipment...  (13,071)   (34,477)   (102,510)      (3,712)                  (153,770)
   Proceeds from sales of rental
    equipment............................             145,519     178,576       23,583                    347,678
   Proceeds from sale of businesses......              16,246       3,000                                  19,246
   Payments of contingent purchase
    price................................              (3,030)    (13,236)                                (16,266)
   Purchases of other companies..........            (337,257)                 (10,080)                  (347,337)
   Capital contributed to subsidiary.....     (331)                                              331
   In-process acquisition costs..........                                                     (4,285)      (4,285)
                                          --------  ---------   ---------     --------      --------    ---------
      Net cash used in investing
       activities........................  (13,402)  (702,258)   (217,658)     (25,666)       (3,954)    (962,938)
Cash Flows from Financing Activities:
   Shares repurchased and retired........                                                    (30,950)     (30,950)
   Dividend distributions to Parent......             (50,450)                                50,450
   Proceeds from debt....................             452,912       3,290                                 456,202
   Repayments of debt....................            (125,238)       (168)      (9,193)                  (134,599)
   Proceeds from sale-leaseback..........             193,478                                             193,478
   Payments of financing costs...........             (16,223)                                  (185)     (16,408)
   Capital contributions by parent.......                 331                                   (331)
   Proceeds from the exercise of stock
    options..............................      331                                                            331
   Proceeds from dividends from
    subsidiary...........................   50,450                                           (50,450)
                                          --------  ---------   ---------     --------      --------    ---------

      Net cash provided by financing
       activities........................   50,781    454,810       3,122       (9,193)      (31,466)     468,054
   Effect of foreign exchange rates......                                       (7,264)                    (7,264)
                                          --------  ---------   ---------     --------      --------    ---------

Net increase (decrease) in cash and cash
 equivalents.............................              (3,689)     13,319          943                     10,573
Cash and cash equivalents at beginning
 of period...............................               3,689      16,414        3,708                     23,811
                                          --------  ---------   ---------     --------      --------    ---------
Cash and cash equivalents at end of
 period..................................           $           $  29,733     $  4,651                  $  34,384
                                          ========  =========   =========     ========      ========    =========
Supplemental disclosure of cash flow
 information:
Cash paid for interest................... $ 19,500  $ 218,346   $     135     $ 10,782                  $ 248,763
Cash paid for income taxes...............           $  19,833                 $  3,913                  $  23,746
Supplemental disclosure of non-cash
 investing and financing activities:
The Company acquired the net assets
 and assumed certain liabilities of other
 companies as follows:
   Assets, net of cash acquired..........           $ 554,077                 $ 11,037                  $ 565,114
   Liabilities assumed...................            (141,320)                    (957)                  (142,277)
   Less:.................................
   Amounts paid in common stock and
    warrants of Parent...................             (10,000)                                            (10,000)
   Amounts paid through issuance of
    debt.................................             (65,500)                                            (65,500)
                                          --------  ---------   ---------     --------      --------    ---------
   Net cash paid.........................           $ 337,257                 $ 10,080                  $ 347,337
                                          ========  =========   =========     ========      ========    =========



                                     F-49



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


                 CONDENSED CONSOLIDATING CASH FLOW INFORMATION
                     For the Year Ended December 31, 1999



                                                                  Guarantor   Non-Guarantor  Other and   Consolidated
                                          Parent        URI      Subsidiaries Subsidiaries  Eliminations    Total
                                         ---------  -----------  ------------ ------------- ------------ ------------
                                                                        (In thousands)
                                                                                       
Net cash provided by (used in)
 operating activities................... $  (4,824) $   292,412    $ 13,185     $ 119,585    $   1,002   $   421,360
Cash Flows From Investing
 Activities:
   Purchases of rental equipment........               (539,775)    (99,365)      (78,972)                  (718,112)
   Purchases of property and
    equipment...........................   (14,181)     (74,634)    (20,366)      (14,468)                  (123,649)
   Proceeds from sales of rental
    equipment...........................                113,982     106,737        14,959                    235,678
   Proceeds from sale of
    businesses..........................                  1,040       2,354         3,127                      6,521
   Payments of contingent purchase
    price...............................                 (2,387)     (4,265)       (1,564)                    (8,216)
   Purchases of other companies.........               (915,937)                  (70,853)                  (986,790)
   Capital contributed to subsidiary....  (522,985)                                            522,985
   In-process acquisition costs.........                                                        (1,002)       (1,002)
                                         ---------  -----------    --------     ---------    ---------   -----------
      Net cash used in investing
       activities.......................  (537,166)  (1,417,711)    (14,905)     (147,771)     521,983    (1,595,570)
Cash Flows from Financing
 Activities:
   Dividend distributions to Parent.....                (19,500)                                19,500
   Proceeds from debt...................              1,025,843      26,524        31,249                  1,083,616
   Repayments of debt...................               (474,808)    (20,958)       (1,884)                  (497,650)
   Proceeds from sale-leaseback.........                 88,000                                               88,000
   Payments of financing costs..........                (18,995)                     (448)                   (19,443)
   Capital contributions by parent......                522,985                               (522,985)
   Proceeds from issuance of
    common stock and warrants,
    net of issuance costs...............    64,701                                                            64,701
   Proceeds from issuance of
    preferred stock, net of issuance
    costs...............................   430,800                                                           430,800
   Proceeds from the exercise of stock
    options.............................    26,989                                                            26,989
   Proceeds from dividends from
    subsidiary..........................    19,500                                             (19,500)
                                         ---------  -----------    --------     ---------    ---------   -----------

      Net cash provided by
       financing activities.............   541,990    1,123,525       5,566        28,917     (522,985)    1,177,013
   Effect of foreign exchange rates.....                                              598                        598
                                         ---------  -----------    --------     ---------    ---------   -----------

Net increase (decrease) in cash and
 cash equivalents.......................                 (1,774)      3,846         1,329                      3,401
Cash and cash equivalents at beginning
 of period..............................                  1,774      16,257         2,379                     20,410
                                         ---------  -----------    --------     ---------    ---------   -----------
Cash and cash equivalents at end of
 period................................. $          $              $ 20,103     $   3,708                $    23,811
                                         =========  ===========    ========     =========    =========   ===========

Supplemental disclosure of cash
 flow information:
Cash paid for interest.................. $  19,500  $    98,728    $  1,194     $   4,863                $   124,285
Cash paid for income taxes..............            $    16,372                 $   1,137                $    17,509

Supplemental disclosure of non-
 cash investing and financing
 activities:
The Company acquired the net assets
 and assumed certain liabilities of
 other companies as follows:
   Assets, net of cash acquired.........            $ 1,371,807                 $  96,760                $ 1,468,567
   Liabilities assumed..................               (448,685)                  (23,697)                  (472,382)
   Less:
   Amounts paid through issuance of
    debt................................                 (7,185)                   (2,210)                    (9,395)
                                         ---------  -----------    --------     ---------    ---------   -----------
   Net cash paid........................            $   915,937                 $  70,853                $   986,790
                                         =========  ===========    ========     =========    =========   ===========


                                     F-50



                             UNITED RENTALS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

                 CONDENSED CONSOLIDATING CASH FLOW INFORMATION
                     For the Year Ended December 31, 1998



                                                                   Guarantor   Non-Guarantor  Other and   Consolidated
                                           Parent        URI      Subsidiaries Subsidiaries  Eliminations    Total
                                          ---------  -----------  ------------ ------------- ------------ ------------
                                                                         (In thousands)
                                                                                        
Net cash provided by (used in) operating
 activities.............................. $  (4,157) $   (63,760)  $ 206,996     $ 67,370      $   9,680  $   216,129
Cash Flows From Investing Activities:
   Purchases of rental equipment.........               (415,140)    (50,494)     (13,900)                   (479,534)
   Purchases of property and equipment...   (15,535)     (65,742)     (2,851)      (1,050)           561      (84,617)
   Proceeds from sales of rental
    equipment............................                 17,992      96,739        4,889                     119,620
   Proceeds from sale of businesses......                 10,640                                               10,640
   Payments of contingent purchase
    price................................                             (2,800)      (1,156)                     (3,956)
   Purchases of other companies..........               (840,730)    (12,510)     (58,597)                   (911,837)
   Capital contributed to subsidiary.....  (492,590)                                             492,590
   In-process acquisition costs..........                                                           (241)        (241)
                                          ---------  -----------   ---------     --------     ----------  -----------
      Net cash provided by (used in)
       investing activities..............  (508,125)  (1,292,980)     28,084      (69,814)       492,910   (1,349,925)
Cash Flows from Financing Activities:
   Dividend distributions to Parent......                 (4,658)                                  4,658
   Proceeds from debt....................   300,000    1,225,586      10,187       27,864       (300,000)   1,263,637
   Repayments of debt....................               (432,222)   (230,685)     (22,760)                   (685,667)
   Proceeds from sale-leaseback..........                 35,000                                               35,000
   Payments of financing costs...........                (24,982)                                (10,000)     (34,982)
   Capital contributions by parent.......                492,590                                (492,590)
   Distributions to stockholders.........                             (3,536)                                  (3,536)
   Proceeds from issuance of common
    stock and warrants, net of issuance
    costs................................   207,005                                                           207,005
   Proceeds from the exercise of stock
    options..............................       619                                                               619
   Proceeds from issuance of redeemable
    convertible preferred securities.....                                                        300,000      300,000
   Proceeds from dividends from
    subsidiary...........................     4,658                                               (4,658)
                                          ---------  -----------   ---------     --------     ----------  -----------
      Net cash provided by (used in)
       financing activities..............   512,282    1,291,314    (224,034)       5,104       (502,590)   1,082,076
   Effect of foreign exchange rates......                                            (281)                       (281)
                                          ---------  -----------   ---------     --------     ----------  -----------
Net increase (decrease) in cash and cash
 equivalents.............................                (65,426)     11,046        2,379                     (52,001)
Cash and cash equivalents at beginning of
 period..................................                 67,200       5,211                                   72,411
                                          ---------  -----------   ---------     --------     ----------  -----------
Cash and cash equivalents at end of
 period.................................. $          $     1,774   $  16,257     $  2,379                 $    20,410
                                          =========  ===========   =========     ========     ==========  ===========
Supplemental disclosure of cash flow
 information:
Cash paid for interest................... $   4,658  $    27,085   $  11,098     $    316                 $    43,157
Cash paid for income taxes...............            $     8,034                 $  2,190                 $    10,224

Supplemental disclosure of non-cash
 investing and financing activities:
The Company acquired the net assets and
 assumed certain liabilities of other
 companies as follows:
   Assets, net of cash acquired..........            $ 1,409,516   $  12,510     $ 79,441                 $ 1,501,467
   Liabilities assumed...................               (500,228)                 (18,633)                   (518,861)
   Less:
   Amounts paid in common stock and
    warrants of Parent...................                (58,093)                  (2,211)                    (60,304)
   Amounts paid through issuance of
    debt.................................                (10,465)                                             (10,465)
                                          ---------  -----------   ---------     --------     ----------  -----------
   Net cash paid.........................            $   840,730   $  12,510     $ 58,597                 $   911,837
                                          =========  ===========   =========     ========     ==========  ===========


                                     F-51



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

    No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the shares offered hereby, but only under circumstances
and in jurisdictions where it is lawful to do so. The information contained in
this prospectus is current only as of its date.

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

                               TABLE OF CONTENTS




                                        Page
                                        ----
                                     
Cautionary Notice Regarding Forward-
  Looking Statements...................   1
Where You Can Find More Information....   1
Incorporation by Reference.............   1
Prospectus Summary.....................   2
Risk Factors...........................   9
Use of Proceeds........................  13
Price Range of Common Stock............  14
Dividend Policy........................  14
Capitalization.........................  15
Selected Consolidated Financial
  Information..........................  16
Management's Discussion and Analysis
  of Financial Condition and Results of
  Operations...........................  19
Business...............................  31
Management.............................  40
Selling Stockholder....................  46
Principal Stockholders.................  47
Description of Capital Stock...........  51
Certain Charter and By-law Provisions..  56
Material U.S. Tax Considerations
  Applicable to Non-U.S. Holders of the
  Common Stock.........................  59
Underwriting...........................  62
Legal Matters..........................  65
Experts................................  65
Index to Financial Statements.......... F-1



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

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

                               9,000,000 Shares

                             United Rentals, Inc.

                                 Common Stock

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

                               [LOGO] United/TM/
                                      Rentals

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

                             Goldman, Sachs & Co.

                          Credit Suisse First Boston

                                   JPMorgan

                           Deutsche Banc Alex. Brown

                            Legg Mason Wood Walker
                                 Incorporated

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



                                    PART II

Item 14. Other Expenses of Issuance and Distribution

    The expenses of the Registrant in connection with the distribution of the
securities being registered hereunder are set forth below. All expenses are
estimated other than the SEC registration fee.


                                                 
Securities and Exchange Commission registration fee $ 66,318
NASD fee...........................................   27,027
Printing expenses..................................  300,000
Accounting fees and expenses.......................   75,000
Legal fees and expenses (other than blue sky)......  250,000
Blue sky fees and expenses.........................   15,000
Miscellaneous......................................   66,655
                                                    --------
   Total........................................... $800,000
                                                    ========


Item 15. Indemnification of Directors and Officers

    The Certificate of Incorporation (the "Certificate") of United Rentals,
Inc. (the "Company") provides that a director will not be personally liable to
the Company or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law (the "Delaware Law"), which concerns unlawful payments of
dividends, stock purchases or redemptions, or (iv) for any transaction from
which the director derived an improper personal benefit. If the Delaware Law is
subsequently amended to permit further limitation of the personal liability of
directors, the liability of a director of the Company will be eliminated or
limited to the fullest extent permitted by the Delaware Law as amended.

    The Registrant, as a Delaware corporation, is empowered by Section 145 of
the Delaware Law, subject to the procedures and limitation stated therein, to
indemnify any person against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with any threatened, pending or completed action, suit or proceeding
in which such person is made a party by reason of his being or having been a
director, officer, employee or agent of the Registrant. The statute provides
that indemnification pursuant to its provisions is not exclusive of other
rights of indemnification to which a person may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors, or otherwise. The
Company has entered into indemnification agreements with its directors and
officers. In general, these agreements require the Company to indemnify each of
such persons against expenses, judgments, fines, settlements and other
liabilities incurred in connection with any proceeding (including a derivative
action) to which such person may be made a party by reason of the fact that
such person is or was a director, officer or employee of the Company or
guaranteed any obligations of the Company, provided that the right of an
indemnitee to receive indemnification is subject to the following limitations:
(i) an indemnitee is not entitled to indemnification unless he acted in good
faith and in a manner that he reasonably believed to be in or not opposed to
the best interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such conduct was unlawful and
(ii) in the case of a derivative action, an indemnitee is not entitled to
indemnification in the event that he is judged in a final non-appealable
decision of a court of competent jurisdiction to be liable to the Company due
to willful misconduct in the performance of his duties to the Company (unless
and only to the extent that the court determines that the indemnitee is fairly
and reasonably entitled to indemnification).

    Pursuant to Section 145 of the Delaware Law, the Registrant has purchased
insurance on behalf of its present and former directors and officers against
any liability asserted against or incurred by them in such capacity or arising
out of their status as such.

                                     II-1



Item 16. Exhibits.



  
1.1  Form of Underwriting Agreement***

4.1  Amended and Restated Certificate of Incorporation of the Registrant dated August 5, 1998
     (incorporated by reference to Exhibit 3.1 to the Registrant's Report on Form 10-Q for the
     quarterly period ended June 30, 1998)

4.2  Certificate of Amendment to the Registrant's Certificate of Incorporation dated September 29,
     1998 (incorporated by reference to Exhibit 4.2 to the Registrant's Registration Statement on
     Form S-3 , No. 333-70151)

4.3  Form of Certificate of Designation for Series A Perpetual Convertible Preferred Stock
     (incorporated by reference to Exhibit 4(k) to the United Rentals, Inc. Registration Statement
     on Form S-3, No. 333-64463) together with a certificate of amendment thereto (incorporated
     by reference to Exhibit A of the United Rentals, Inc. Proxy Statement on Schedule 14A dated
     July 22, 1999)

4.4  Form of Certificate of Designation for Series B Perpetual Convertible Preferred Stock
     (incorporated by reference to Exhibit B of the United Rentals, Inc. Proxy Statement on
     Schedule 14A dated July 22, 1999)

4.5  By-laws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant's Report
     on Form 10-Q for the quarterly period ended June 30, 1998)

5.1  Opinion of Ehrenreich Eilenberg & Krause LLP*

10.1 Senior Restricted Stock Agreement, dated as of June 5, 2001, between the Registrant and
     Bradley S. Jacobs**

10.2 Senior Restricted Stock Agreement, dated as of June 5, 2001, between the Registrant and
     Wayland R. Hicks**

10.3 Senior Restricted Stock Agreement, dated as of June 5, 2001, between the Registrant and
     John N. Milne**

10.4 Senior Restricted Stock Agreement, dated as of June 5, 2001, between the Registrant and
     Michael J. Nolan**

23.1 Consent of Ehrenreich Eilenberg & Krause LLP (included in Exhibit 5.1)

23.2 Consent of Ernst & Young LLP*

24.1 Power of Attorney (included in Part II of the original Registration Statement under the caption
     "Signatures")


--------


    * Filed herewith


   ** Previously filed


  *** To be filed by amendment


Item 17. Undertakings.

    (a) The undersigned Registrant hereby undertakes:

    (1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:

           (i) To include any prospectus required by Section 10(a)(3) of the
        Securities Act of 1933;


           (ii) To reflect in the prospectus any facts or events arising after
        the effective date of the Registration Statement (or the most recent
        post-effective amendment thereof) which, individually or in the
        aggregate, represent a fundamental change in the information set forth
        in the Registration Statement;

                                     II-2



           (iii) To include any material information with respect to the plan
        of distribution not previously disclosed in the Registration Statement
        or any material change to such information in the Registration
        Statement;

provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.

    (2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

    (3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.

    (b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities and Exchange
Act of 1934) that is incorporated by reference in the Registration Statement
shall be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

    (c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

    (d) The undersigned registrant hereby undertakes that:

           (i) For the purpose of determining any liability under the
        Securities Act of 1933, the information omitted from the form of
        prospectus filed as part of this Registration Statement in reliance
        upon Rule 430A and contained in a form of prospectus filed by the
        Company pursuant to Rule 424(b)(1) or (4) or 497(h) under the
        Securities Act shall be deemed to be part of this Registration
        Statement as of the time it was declared effective.

           (ii) For the purpose of determining any liability under the
        Securities Act of 1933, each post-effective amendment that contains a
        form of prospectus shall be deemed to be a new registration statement
        relating to the securities offered therein, and the offering of such
        securities at that time shall be deemed to be the initial bona fide
        offering thereof.


                                     II-3



                                  SIGNATURES


    Pursuant to the requirements of Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3, and has duly caused this Amendment No. 1
to registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Greenwich, Connecticut, on the 6th day of
September, 2001.


                                          UNITED RENTALS, INC.

                                             /S/ MICHAEL J. NOLAN
                                          By: _________________________________
                                             Michael J. Nolan
                                             Chief Financial Officer


    Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to registration statement has been signed by the following persons in the
capacities and on the dates indicated.







           Name                        Title                     Date
           ----                        -----                     ----
                                                     

   /S/ BRADLEY S. JACOBS Chairman, Chief Executive         September 6, 2001
   ---------------------   Officer and Director (principal
     Bradley S. Jacobs     executive officer)

             *           Vice Chairman and Director        September 6, 2001
   ---------------------
     Wayland R. Hicks

             *           Vice Chairman and Director        September 6, 2001
   ---------------------
       John N. Milne

             *           Director                          September 6, 2001
   ---------------------
       Leon D. Black

             *           Director                          September 6, 2001
   ---------------------
    Richard D. Colburn

             *           Director                          September 6, 2001
   ---------------------
      Ronald M. DeFeo

             *           Director                          September 6, 2001
   ---------------------
     Michael S. Gross

             *           Director                          September 6, 2001
   ---------------------
    Richard J. Heckmann

             *           Director                          September 6, 2001
   ---------------------
     John S. McKinney




                                      S-1






           Name                        Title                  Date
           ----                        -----                  ----
                                                  

            *                Director                   September 6, 2001
--------------------------
     Gerald Tsai, Jr.

            *                Director                   September 6, 2001
--------------------------
     Timothy J. Tully

            *                Director                   September 6, 2001
--------------------------
    Christian M. Weyer

   /S/ MICHAEL J. NOLAN      Chief Financial Officer    September 6, 2001
--------------------------     (principal financial and
     Michael J. Nolan          accounting officer)

*By   /S/ MICHAEL J. NOLAN
--------------------------
     Michael J. Nolan
     Attorney-in-fact



                                      S-2